Daimler, the owner of Mercedes-Benz, has announced that it will be cutting 3 percent of its workforce, including 10 percent of worldwide management positions, over the next three years. The company employed a little over 300,000 staff at factories in 17 countries at the end of the third quarter. That means the reductions would be in the low five-digits, or at least 10,000 people.
According to the company’s statement, the plans have been accepted by the firm’s works council, which includes labor union representation. The company said in its announcement that it would handle the job reductions “in a socially responsible manner”, including the use of “natural fluctuation”. A variety of measures will be used to cut costs and jobs, including expanding part-time retirement, offering shorter working weeks, and creating a severance program to be offered in Germany. Daimler said the changes will save the company €1.4 billion ($1.5 billion) by the end of 2022
Daimler, along with most other auto manufacturers, is grappling with a slowing auto market. According to data from Fitch Ratings, global car sales are expected to drop by around 3.1 million this year. The slump could worsen as economies around the world slow or even fall into recession. Daimler has repeatedly cut its profit outlook in recent months, and said last month that the group’s operating profit will be “significantly lower” than a year ago.
Daimler’s announcement marks the third announcement on cost cuts this week by a major German car company. Volkswagen’s luxury car unit Audi said this week it will cut 9,500 jobs, or roughly 10 percent of its global workforce, by 2025 to free up €6 billion ($6.6 billion) over 10 years. BMW also made an announcement this week saying that its management and labor had reached an agreement on measures to cut costs by reducing bonus and other pay schemes for staff.