Mercedes-Benz will offer staff buyouts as China woes worsen

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The German automaker cut its full-year profit forecast on Tuesday, citing a worsening China market and higher fourth-quarter costs

KIRILL KUDRYAVTSEV / Getty Images

Mercedes-Benz will roll out a voluntary buyout offer for support staff in Germany this December, the company said, as part of its drive to operate more efficiently.

The company said the severance program will cover "indirect functions" in Germany.

“Market conditions have become even more challenging over the course of the year, particularly in China,” CEO Ola Kallenius said, according to The Wall Street Journal. “With more product launches ahead and AI changing the way we work, we are focused on building a faster, more efficient and even more competitive Mercedes-Benz.”

Mercedes-Benz cut its profit outlook for the year on Tuesday. It now projects an adjusted sales margin of 2% to 3% for its cars unit, down from an earlier range of 3% to 5%. It expects EBIT to hold steady at 5.82 billion euros ($6.47 billion), the same as a year earlier. The company cited the worsening China market and higher fourth-quarter costs, including for raw materials.

In preliminary third-quarter figures, Mercedes-Benz reported earnings before interest and tax of 1.77 billion euros, compared with 750 million euros in the year-earlier period. The adjusted sales margin for its cars division came in at 2.5%, down from 4.8%. Revenue slipped 4.5%, landing at 30.7 billion euros. Car sales in China fell 31% in the quarter from a year earlier.

Western automakers face stiff rivalry in China, where a drawn-out price war has gripped many producers, according to The Wall Street Journal.

Mercedes-Benz said it held up against these pressures by keeping a steady focus on costs, while its vans and financial services businesses contributed strongly. It anticipates a lift from more than 40 new models arriving between 2025 and 2027, along with stepped-up productivity efforts at its German sites.

Last year, the company laid out efficiency plans that involve cutting jobs and relocating a portion of its output from Germany to cheaper locations like Hungary. It is also pursuing cuts to energy spending, greater automation and lower logistics outlays, all aimed at reducing what it costs to build each vehicle.

The company said it is applying artificial intelligence to work faster and boost productivity and efficiency in research and development, production, sales and administration. It said customers are still showing strong interest in its new electric lineup, and orders for key models in Europe are booked well into 2027.

Mercedes-Benz stock dropped by as much as 5.5% in early European trading on Tuesday after the forecast cut. The stock has lost more than a third of its value so far in 2026.

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