Mercedes-Benz is offering some of its employees severance packages worth up to $440,000 in an effort to reduce its workforce without resorting to forced layoffs.
The move is part of a broader restructuring plan to save $5 billion over the next two years, as the carmaker prepares for a future where electric vehicles (EVs) may not be as profitable as previously forecasted.
Due to Germany’s strong union protections, Mercedes cannot easily lay off workers. Instead, it has presented employees with an exit package that promises generous compensation to those who choose to leave voluntarily.
“Anyone who wants to leave the company can do so quite safely,” said Ergun Lümali, chairman of Mercedes’ cooperation council, in a statement to Handelsblatt.
How Much Is Mercedes Offering?
According to Handelsblatt, a middle manager with 30 years of seniority and a monthly salary of $9,400/month could receive a severance payment of over 3.4 million kroner ($500,000).
A factory worker in his 30s earning $5,880/month could walk away with a payout of just over $147,000.
The automaker hopes that these packages will convince up to 30,000 employees to resign voluntarily. While management is encouraging the program, Lümali stressed that no one is being forced out.
“If you don’t want to quit, you don’t have to. But if you choose to do so, you will receive generous compensation.”
Mercedes Follows Industry-Wide Trend of Cuts
Mercedes’ move mirrors actions taken by other major European automakers. Volkswagen, for example, is currently executing a massive cost-cutting program that includes eliminating 34,000 jobs and closing three factories in Germany.
Across the industry, manufacturers are reckoning with a new reality: electric vehicles are proving less profitable and slower to catch on than expected. At the same time, competition from Chinese EV makers has intensified. But even that pressure may ease, as reports now suggest at least one major Chinese car brand is nearing bankruptcy—with employees reportedly going unpaid.
Mercedes, like many automakers, had envisioned an all-electric future. But that vision is now colliding with slower-than-expected adoption, high development costs, and weaker consumer demand.
These realities are forcing brands to adjust quickly. While Mercedes once planned for an electric-only lineup, it now appears committed to scaling back and tightening operations, particularly in Germany, where its manufacturing base is most exposed.
Employees who stay with the company may not be spared the impact.
According to reports, remaining workers are likely to face pay cuts as part of the restructuring effort.
