Decline in Mercedes-Benz's victory exceeds fifty percent - Decline in Mercedes-Benz earnings exceeds 50%
In a bid to improve profitability and sales amid a challenging global market, Mercedes-Benz announced a comprehensive cost-cutting program in February 2025. The program is designed to make the company leaner, faster, and stronger, and to deliver intelligent, desirable products while tightly controlling costs.
The core elements of the program include:
- Reducing production costs by 10% by 2027: This will be achieved through increased efficiency in the global production footprint and closer collaboration with suppliers to optimize material costs.
- Cutting fixed costs by an additional 10% by 2027: This will be accomplished by building on significant cost discipline gains made over the past four years.
- A comprehensive severance program for employees in indirect (non-production) areas, agreed upon with the central works council to reduce overhead.
- Initiatives to leverage growth in the direct sales channel and elevate the customer service experience to boost revenue quality.
- Preparing for an "intense product launch campaign" featuring multiple new or refreshed models through 2027 to stimulate sales recovery after a projected 2025 sales slump.
The program is part of Mercedes-Benz's "Next Level Performance" strategic initiative, which aims to increase competitiveness and resilience in an uncertain global market, particularly in response to tariff pressures and strong competition in key regions like China and the US.
In the first half of the year, Mercedes-Benz's profit dropped by more than 50%, from around 6.1 billion euros to around 2.7 billion euros. Revenue fell by 8.6%, from 72.6 billion euros to around 66.4 billion euros. The group's result declined by 55.8% compared to the same period last year, and the operating result (EBIT) decreased by around 55%.
Last year, Mercedes-Benz's earnings before interest and taxes (EBIT) dropped by nearly a third to 13.6 billion euros. The adjusted profit margin for the car division is expected to be between four and six percent by 2025, down from 8.1% in the previous year. Sales are also expected to be significantly lower.
Despite these challenges, CEO Ola Källenius remains committed to the company's future. He emphasized that the cost-cutting program is about making Mercedes-Benz leaner, faster, and stronger, and reinforcing the company's commitment to delivering intelligent, desirable products while tightly controlling costs.
[1] Mercedes-Benz announces cost-cutting program to boost profitability and sales
[2] Mercedes-Benz unveils cost-cutting program targeting 10% production cost reduction by 2027
[3] Mercedes-Benz's cost-cutting program: What does it mean for the company's future?
[4] Mercedes-Benz's cost-cutting measures: A closer look at the company's strategy
[1] The cost-cutting program announced by Mercedes-Benz is aimed at enhancing profitability and sales, focusing on reducing production costs and optimizing material costs.
[2] As part of the cost-cutting program, Mercedes-Benz plans to lower production costs by 10% by 2027, aiming to achieve this through increased efficiency and collaboration with suppliers in the global production footprint.
