Trump tariffs loom over Mercedes-Benz job cuts in China

Mercedes-Benz has begun implementing workforce reductions of up to 15% in China, primarily targeting its financing and sales units as the luxury automaker confronts declining performance in one of its key markets, according to multiple reports. The job cuts — announced just before U.S. president Donald Trump's latest confirmation that tariffs on China, Mexico and Canada will come into effect on March 4 — will mainly affect Mercedes-Benz Automobile Finance Co and Beijing Mercedes-Benz Sales Service Co, with layoffs accelerating this month, Bloomberg News reported today, citing people familiar with the matter. Mercedes-Benz job cuts and China’s Two Sessions: Why timing matters The timing of these layoffs is notable as they come just days before China’s annual “Two Sessions” political meetings are set to begin on March 4, where employment will be a central focus. During these high-profile governmental gatherings, Premier Li Qiang is expected to present the Government Work Report outlining economic priorities, including job creation targets. Last year, Beijing set targets of 12 million new urban jobs with an unemployment rate of 5.5%, and similar figures are anticipated for 2025. Employment remains politically sensitive in China due to its potential link to social unrest. Compensation package details for affected employees According to Chinese media sources, employees impacted by the cuts will receive compensation of N+9, meaning their standard severance plus nine months of additional pay. If they do not secure new employment within two months, they may also receive salaries for March and April. The workforce reduction follows Mercedes-Benz’s recent financial report revealing a 28% YoY decline in net profit to 10.4 billion euros ($10.9 billion). During the financial report meeting, Mercedes-Benz Group CEO Ola Källenius said the company is implementing measures to make the company “faster, leaner and stronger.” Chinese competition and changing luxury auto landscape The German luxury carmaker joins other legacy automotive manufacturers who have announced plant closures and layoffs as they struggle with high energy and labor costs, weak demand, and intensifying competition from Chinese manufacturers like Nio (蔚来汽车), Hongqi (红旗), and Zeekr (极氪). General Motors is closing a plant this month in the northeastern Chinese city of Shenyang as part of the U.S. automaker’s restructuring in China, according to a company source. Job losses aren’t confined to this crucial market. Aston Martin yesterday announced it is laying off some 170 workers globally after a 42% increase in annual losses, largely because of weakening demand in China. Newer foreign entrants are also under pressure. Tesla is experiencing a major slowdown in sales despite its aggressive pricing strategies. Its sales in China dropped 11.5% YoY in early 2025, partly due to Chinese New Year seasonality and factory upgrades. Mercedes-Benz celebrated its 20th anniversary in China this year and had announced additional investments of 14 billion RMB ($1.92 billion) with Chinese partners in September 2024.

Trump tariffs loom over Mercedes-Benz job cuts in China

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Published February 27, 2025

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Trump tariffs loom over Mercedes-Benz job cuts in China