Mercedes-Benz is the latest German automaker to acknowledge the impact of the ongoing crisis in China's car market. The Stuttgart-based brand now faces the daunting task of saving billions to counter a sharp decline in sales.
Financial Setbacks
The challenges in the Chinese market have taken a toll on Mercedes' profits, as reported by Boosted. Recent quarterly reports reveal a steep drop in the group's earnings over the past three months.
In response, the company’s board recently traveled to China to assess the situation firsthand. They analyzed market trends, evaluated competitors’ strategies, and explored potential solutions to regain momentum.
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To address these financial pressures, Mercedes is doubling down on cost-saving initiatives. German outlet Handelsblatt reports that the automaker is planning further measures to stabilize its finances.
Mercedes launched a savings program in 2020 with the aim of cutting fixed costs by 20% by 2025 (compared to 2019 levels). Thus far, the company has achieved reductions of 15–16%, but Chief Financial Officer Harald Wilhelm says this is insufficient given the current challenges in China.
Focus on the Chinese Market
During their visit to China, Mercedes executives focused on understanding local consumer preferences and studying advancements in competitor technology. Particular attention was given to assistant systems and self-driving cars, areas where Chinese automakers are making rapid progress.
The trip also resulted in agreements with local companies to collaborate on "intelligent driver solutions," signaling Mercedes’ intent to strengthen its position in the region.
Given the persistent difficulties in China, Mercedes has decided to extend its savings program. The goal is to achieve additional annual cost reductions amounting to a double-digit billion-euro figure, on top of the savings already planned.
