Mercedes-Benz accelerates "slimming down" and enhances efficiency transformation

Author | Wang Xiaojun

Editor | Zhou Zhiyu

A few days after the financial report was released, Mercedes-Benz began internal adjustments.

On February 27, the news of "Mercedes-Benz China laying off employees with compensation of N+9" trended online.

In response, Mercedes-Benz stated on February 27 to Wall Street Insight that this is a business adjustment necessary to improve operational efficiency and market competitiveness, which will inevitably involve the work arrangements of some employees. Mercedes-Benz China will strictly comply with relevant laws and regulations, providing reasonable and legal follow-up plans for the affected employees.

In the long run, if efficiency improvements can enhance product competitiveness, Mercedes-Benz may regain its position in the new round of industry reshuffling.

When releasing the financial report, Mercedes-Benz's new strategic plan has already been laid out until 2027, including a series of electrification and intelligent products, which Mercedes-Benz refers to as "the strongest product offensive in history."

The effectiveness of this will depend on its subsequent performance.

Efficiency Revolution

The changes occurring in the automotive industry in recent years have become very evident, with the most intense competition seemingly always in the next year.

Even giants like Mercedes-Benz cannot continuously live under the glory of past luxury brands, enjoying good times in a warm and humid eternal era.

It is understood that the proportion of layoffs at Mercedes-Benz this time is about 15%, mainly affecting the finance and sales departments, with the main companies involved being Mercedes-Benz (China) Automotive Sales Co., Ltd. and Mercedes-Benz Automotive Finance Co., Ltd., while the R&D system has not yet been affected.

Currently, the layoff process has been initiated, including not renewing contracts for some fixed-term employees. The pace of layoffs has noticeably accelerated this month, and those laid off will receive N+9 compensation. Reports indicate that after the layoffs, Mercedes-Benz will also provide certain re-employment counseling for the affected employees. If laid-off employees do not find new jobs within the next two months, they can still receive salaries for March and April, which is the origin of the "N+11" term.

The decision to lay off can also be inferred from the financial report released a few days ago, as the pressure on performance is indeed real.

On February 20, Mercedes-Benz just disclosed its performance report for the 2024 fiscal year. The data shows that for the entire year of 2024, Mercedes-Benz's revenue was €145.594 billion (approximately RMB 1.1 trillion), a year-on-year decrease of 4.5%, which is not a large decline among traditional automakers.

However, during the same period, Mercedes-Benz's net profit was €10.4 billion (approximately RMB 79.4 billion), a year-on-year decrease of 28%, which is quite significant; especially from the sales perspective, the Chinese market is the main source of the decline in Mercedes-Benz's sales, with total sales in the Chinese market for 2024 being 683,600 units, a year-on-year decrease of 7.3%. Therefore, Mercedes-Benz has no choice but to start a new round of transformation from the Chinese market.

While announcing multiple data declines in the financial report, Mercedes-Benz also laid out its macro strategy.

Mercedes-Benz revealed its 2025 technology product strategy in the financial report and also mentioned the "Operational Improvement Plan" — aiming to reduce production and operational costs by 10% by 2027 The current layoffs are also part of this plan.

In fact, regarding the adjustments to the Chinese market, Duan Jianjun, president of Beijing Benz Sales Service Co., Ltd., made it clear at the strategic press conference at the beginning of the year.

At that time, Mercedes-Benz first targeted the dealer network, optimizing operations through a "plus-minus" strategy, including merging inefficient outlets and upgrading store hardware, among other channel innovations.

Moreover, Mercedes-Benz's efficiency revolution is not limited to the Chinese market.

At the earnings conference, Ola Källenius, chairman of the board of directors of Mercedes-Benz Group AG, further emphasized that in order to ensure the company's competitiveness, Mercedes-Benz is taking measures to make the company faster, leaner, and stronger. According to official plans, the production capacity layout in its home country, Germany, will be appropriately reduced, with an expected decrease of 100,000 units.

In the past two years, competition in the automotive industry has become more comprehensive, shifting from a scale competition to an all-around capability competition focused on who can survive longer, thus testing a company's flexibility, resilience, and risk resistance.

The automotive industry is a super category, and companies engaged in it cannot be merely refined innovative small firms, so improving efficiency has always been a concomitant issue. A few days ago, XPeng Chairman He Xiaopeng also issued an internal letter calling for the abandonment of PPTs, reducing meeting durations, and sharing rooms during business trips to lower costs and improve efficiency.

This is especially true for traditional car manufacturers, which need to find a balance between "scale expansion" and "agility" in their transformation.

The Elephant Turns

In recent years, traditional car manufacturers have been undergoing vigorous transformations, but from the process and results, transformation is not an easy task.

Especially in the past few years, with limited market recognition for the electric vehicle models launched by these traditional luxury brands, how to break through has become a pressing issue for Mercedes-Benz.

After observing the market for several years, Mercedes-Benz will join this transformation offensive with a more competitive posture.

Powerful new models are already on the way. In March of this year, the all-new Mercedes-Benz CLA will be launched, offering various power versions including pure electric, mild hybrid, and plug-in hybrid, and supporting 800V technology as well as the L2++ intelligent driving system.

This model is just one of many. Mercedes-Benz plans to launch up to 36 new models by 2027; at the same time, it will introduce a new family design language and a series of new technologies such as AI across its entire product lineup.

Many of these products are specifically targeted at the Chinese market. Mercedes-Benz has stated that it will launch seven models exclusive to China in the next three years, covering pure electric, plug-in hybrid, and fuel-driven forms.

The new products also change the previous strategy of "oil to electric," fully reflecting insights into the enthusiastic wave of intelligence in the Chinese market. For example, the new models will be equipped with localized intelligent driving systems (such as the "no map" L2++ advanced intelligent driving) and the MB.OS operating system.

To this end, Mercedes-Benz is making significant investments in order to have a say in the "tech luxury" that everyone is competing for today, with R&D also taking place in China, the largest market for intelligence.

Currently, Mercedes-Benz has the largest R&D network outside Germany in China, with two major R&D centers in Beijing and Shanghai allowing Mercedes-Benz to fully leverage China's innovation ecosystem and supply chain to achieve "Chinese speed" innovation with "Mercedes-Benz standards." For example, the R&D team in China has developed lane-level navigation, 3D rendering maps, and other technologies, which will be first applied to the aforementioned models targeting the Chinese market In the past five years, Mercedes-Benz has invested 10.5 billion yuan in research and development in China, with the R&D team expanding to 2,000 people; last September, Mercedes-Benz announced a joint investment of over 14 billion yuan with Chinese partners in China. Mercedes-Benz stated that R&D investment will reach a historical peak in 2025 (with 8.7 billion euros in R&D spending for passenger car business in 2024), focusing on areas such as the MB.OS architecture, pure electric platforms, and solid-state batteries.

These results will be reflected in the next three years, with investments related to the all-new CLA, pure electric GLC SUV, pure electric C-Class sedan, and AMG.EA models expected to be completed by the end of 2027.

Currently, a series of cost-reduction measures by Mercedes-Benz are also aimed at streamlining business processes and ensuring financial resilience.

According to PwC's Automotive Industry Transformation Index, the organizational structure of traditional car manufacturers is, on average, 12-18 months behind the pace of technological change. Mercedes-Benz's adjustment measures are essentially a systematic correction of this lag effect. The effectiveness of these measures still needs to be verified through subsequent key indicators such as R&D efficiency and output per capita.

Furthermore, to further restore profit margins, Mercedes-Benz is also placing greater emphasis on the "high-end luxury" and "core luxury" segments, planning to launch more Maybach, AMG, and G-Class models. For example, the AMG series will introduce new pure electric performance vehicles, and the G-Class family will launch compact products to expand the market.

This transformation by Mercedes-Benz is centered on "lean operations," attempting to adapt to the new era of competition while retaining the luxury brand tone through an electrified product matrix, organizational efficiency optimization, and localized innovation. The challenge lies in balancing short-term cost pressures with long-term technological investments and narrowing the gap with new car-making forces in the field of intelligence.

When the industry's technological paradigm undergoes fundamental changes, any company within it must adapt to the changes and respond flexibly to the evolving situation. If the strategy is executed effectively, Mercedes-Benz may complete key positioning before the electrification milestone in 2027, reshaping its industry leadership