Mercedes Benz has unveiled a new cost-cutting strategy to revive sales and margins following a forecast decline in 2025 earnings. On Thursday, Mercedes announced a hefty cost cut of 10% after experiencing nearly one-third decline in 2024 profits, driven by a downturn in China and weak EV sales.
The German automotive giant experienced a 28% drop in net profit from the previous year, reaching €10.4 billion ($10.8 billion). while revenue also declined by approximately 4% to €145.6 billion. The company announced its intention to reduce production costs by 10% by 2027 to ‘secure the company’s future competitiveness’.
“In an increasingly uncertain world, we are taking steps to make the company leaner, faster and stronger.” CEO Ola Kallenius said in a statement.
Company Executives declared that projected earnings before interest, taxes and other expenses would fall ‘significantly below’ the €13.6bn (£11.3bn) recorded in 2024, which had already decreased by 30% compared to the year before. This dip coincides with a 23% collapse in electric vehicle sales and a 7% decline in Chinese sales, which remains the corporation’s biggest individual market.
Despite planning several product launches this year, the company foresees a significant drop in profits and has raised concerns about potential tariffs from Donald Trump’s policies. Mercedes’ Chief Financial Officer, Harald Wilhelm, cautioned that tariffs might reduce profit margins by 1% point this year. The company’s profit margins are already projected to be between 6% and 8% in 2025.
Mercedes asserted plans to combat its profit decline through a series of new vehicle releases, starting with the CLA. The lineup will expand in 2026 with an upgraded S-Class, followed by all-electric versions of the GLC and C-Class, plus numerous battery electric vehicles and high-tech internal combustion engine models from Mercedes-AMG.
The company expects overall sales will strengthen as more than twenty refreshed or entirely new models reach consumers within the next two years.
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