Mercedes-Benz， a century-old German automaker， is currently facing a challenging period.
Recent media reports indicate that Mercedes-Benz (referred to as “Mercedes-Benz”) is implementing what could be its largest-ever layoff plan. As of now， approximately 4，000 employees have accepted severance packages and departed， with senior management potentially receiving compensation of up to 500，000 euros (approximately 4.12 million RMB).
The compensation structure is reported to be tiered， directly linked to job level and tenure. Mercedes-Benz has also introduced an “early bird bonus” to incentivize employees to make prompt decisions. The layoffs are based on a voluntary principle， with employees having already left with their “generous packages” since October.
Mercedes-Benz responded to Phoenix Network Finance’s “Company Research Institute，” stating that the reported figures of 4，000 employees accepting severance and related compensation information do not pertain to the Chinese market， and that the data regarding 30，000 layoffs is inaccurate.
While the authenticity of the mass layoff rumors remains to be definitively confirmed， it is evident that the century-old automaker， Mercedes-Benz， has been struggling with an unsuccessful transformation and a slump in performance globally in recent years.
01 Sales and Performance Both Suffer
As early as March of this year， German publication Handelsblatt reported that Mercedes-Benz management would send a letter to all employees in April， offering generous severance packages to departing employees. Further information suggested that the severance package plan primarily targeted employees in engineering， administration， and IT fields. This severance package plan was initiated in April， allowing relevant employees to apply before March 2026.
At that time， it was reported that Mercedes-Benz CEO Ola Källenius hoped that severance compensation would encourage approximately 30，000 employees to leave voluntarily. The official target is to save approximately 5 billion euros annually by 2027 through measures such as outsourcing decisions and not refilling vacant positions.
In the first half of the year， Mercedes-Benz also announced significant layoff and cost-reduction plans. Specifically， production and fixed costs are to be reduced by approximately 10% by 2027， German domestic plants will cut production by 100，000 vehicles， and layoffs will be implemented for indirect positions.
Behind Mercedes-Benz’s decision to implement layoffs lies the harsh reality of the group’s lackluster sales performance. Official data shows that in the third quarter， Mercedes-Benz’s global sales were 525，300 vehicles， a year-on-year and quarter-on-quarter decline of 12% and 4% respectively. Cumulative sales for the first three quarters were 1，601，600 vehicles， a year-on-year decrease of 9%.
With sales not meeting expectations， Mercedes-Benz’s revenue performance has also faced severe challenges. Data shows that last year， Mercedes-Benz’s total revenue was 145.59 billion euros， a year-on-year decrease of 4%. Earnings Before Interest and Taxes (EBIT) were 13.6 billion euros， a year-on-year decrease of 31%; net profit was 10.4 billion euros， a sharp drop of 28.4% year-on-year.
While releasing this disappointing earnings report， Mercedes-Benz proposed a dividend of 4.3 euros per share， down from 5.3 euros in the previous year. It also decided to repurchase shares worth up to 5 billion euros within 24 months to boost investor confidence.
However， in the first half of this year， Mercedes-Benz’s downturn continued. Revenue was 66.377 billion euros， an 8.6% decrease year-on-year. Net profit dropped from 6.087 billion euros in the same period last year to 2.688 billion euros， a decline of 55.8%. Net profit in the second quarter alone was 957 million euros， a year-on-year decrease of 68.7%.
The significant decline in Mercedes-Benz’s performance last year was largely attributed to the loss of the Chinese market. In 2024， Mercedes-Benz’s revenue in the Chinese market was 23.139 billion euros， a year-on-year decrease of 8.5%. A total of 683，600 vehicles were sold in China in 2024， a year-on-year decrease of 7.3%. The Chinese market represents the largest single market decline for Mercedes-Benz globally.
In the first half of the year， Mercedes-Benz did not see positive news from its China operations either. The Chinese market accounted for the largest year-on-year decline in global automotive sales. Cumulative sales in China for the first half of the year were 293，200 vehicles， a year-on-year decrease of 14%.
02 Unlocking Navigation Comes at a Price
In addition to macroeconomic competitive pressures， some controversial operational strategies employed by Mercedes-Benz itself are indirectly exacerbating its difficulties in the Chinese market. A prominent example is the series of paid unlockable features it has introduced.
Recently， some Mercedes-Benz owners have complained that Gaode Navigation， which is free on their mobile phones， incurs a charge within the Mercedes-Benz vehicle. The three-year package is priced at 1，998 RMB， averaging 666 RMB per year.
Image source: Social media screenshot
It’s not just software that incurs fees; even hardware already installed in the vehicle requires additional payment from owners to unlock full functionality. For instance， rear-wheel steering， which is standard on some domestic new energy vehicles in the 200，000 RMB price range， is only offered with a free 4.5-degree steering unlock on Mercedes-Benz models. Unlocking a 10-degree steering angle requires an additional fee.
The images shared by owners show that the pricing for unlocking a 10-degree steering angle in both directions for rear-wheel active steering is 4，998 RMB for an annual plan， 12，998 RMB for a three-year package， and over 16，000 RMB for a permanent purchase.
Image source: Social media screenshot
Image source: Social media screenshot
These paid features have sparked considerable public criticism. Some have expressed confusion and dissatisfaction with the charges for these functionalities.
Others believe that the user experience of these paid features falls far short of those offered by domestic car manufacturers.
Some have expressed their frustration with a pointed remark: “The biggest relief when buying a car now is that the brakes and accelerator don’t cost extra.”
03 Struggling in China， Seeking a Way Out
Mercedes-Benz executives have repeatedly emphasized that China is its most crucial market. Given that this is the most fiercely contested arena for new energy vehicles globally， Mercedes-Benz’s ability to maintain its market share here not only impacts short-term revenue but also determines its continued success in the critical battle for future mobility.
The management has also fully recognized the intense competition it faces in China. In China， Mercedes-Benz competes with over 100 companies. Källenius has stated， “We (Mercedes-Benz) cannot afford to make any mistakes in the market.”
Specifically in the Chinese market， the pressure falls on Oliver Thöne， who is responsible for Greater China operations. He took over in February of this year， and under his leadership， Mercedes-Benz has reportedly outlined its future model lineup through 2030.
Although Mercedes-Benz launched its new electric brand EQ in 2016， the sales performance of its EQ series models lags significantly behind those of domestic new energy vehicle startups.
Data from third-party statistical platforms shows that in September， sales for Mercedes-Benz’s EQB， EQE SUV， EQA， and EQE models were 370， 238， 266， and 103 units respectively. The cumulative sales of these models were less than one-tenth of the monthly sales of domestic new energy startups like XPeng， Leapmotor， and Nio.
Mercedes-Benz is now striving to regain its former glory in China and catch up in the electric vehicle sector. The latest plan indicates that Mercedes-Benz will launch 36 new models by 2027， of which 17 will be electric vehicles， and it has announced the introduction of seven China-exclusive models.
Notably， Oliver Thöne’s plans for Mercedes-Benz in China extend beyond electric vehicles. He has stated that Mercedes-Benz will not abandon the development of traditional internal combustion engine vehicles， saying， “In the Chinese market， many people believe that intelligence is exclusive to electric vehicles. Mercedes-Benz believes that intelligent technology is not exclusive to electric vehicles. Intelligent technology can also be applied to gasoline-powered vehicles.”
Furthermore， Mercedes-Benz is actively pursuing cost reduction. The company plans to reduce local material costs in the Chinese market by more than 10% by 2027 compared to 2024， and to decrease variable production costs and fixed costs by 20%.
Specific plans include Mercedes-Benz’s intention to introduce a new generation of batteries and to strengthen standardization to reduce the number of ECUs (Electronic Control Units). Complexity will also be reduced across all vehicle architectures. For example， entry-level models in the future will only offer one engine option.
However， developing new products and adjusting vehicle architectures still require time. For Mercedes-Benz， facing an imminent crisis， layoffs that can quickly reduce costs are one of the most direct measures to improve efficiency， especially against the backdrop of declining sales. Nevertheless， such large-scale layoffs may lead to a loss of talent and experience， as well as a decline in employee morale and engagement， potentially harming the company’s vitality. Whether this is a case of “drinking poison to quench thirst” remains to be seen.
