Daimler Seeks $6.75 Billion in Cost Cuts, Will Axe 10,000 Jobs Overall: Report

Cuts to occur at Mercedes-Benz by 2021, according to sources close to the matter.

Mercedes-Benz sign. Mercedes-Benz is a division of Daimler
SOPA Images—LightRocket via Getty Images

Daimler’s new boss Ola Källenius won’t formally start until May 22, but is already reportedly looking to reduce the company’s footprint with a reported slashing of up to 10,000 jobs, according to German publication Manager Magazin. The publication, which doesn’t cite where its information came from, states that Källenius is looking to make both Daimler and Mercedes-Benz more streamlined, as well as seek a $6.75 billion in cost savings.

The article, which starts innocuously with Mercedes-Benz and Daimler’s overall commitment to the Paris Climate Agreement and reducing its carbon footprint, abruptly segued into how the forthcoming boss would be reducing the company’s workforce, stating, “Källenius will also reduce jobs, in the medium term maybe 10,000 from the current 298,700.” 

Though no sources are cited, the information has a thread of credibility as in February of this year, Daimler announcedthat it would be preparing “comprehensive” cost-cutting. The February announcement came on the heels of a number of uphill battles the German manufacturer is facing, including the ongoing trade dispute with the United States, total car sales declining, and the research and development costs of electric vehicles. However, Daimler recently spent $1.1 billion in a series of joint investments with BMW on future mobility services.

“The environment will remain extremely challenging in 2019. That’s why we must continue working intensively on our efficiency,” said outgoing CEO Dieter Zetsche at the time. 

Daimler’s set to release the company’s first-quarter 2019 earnings next week on April 26, but the signs say that it could see further declines in sales and net profit. Regarding the reduction of Daimler’s total workforce, Manager Magazin stated that the cuts would likely “happen [in] socially acceptable [ways] and without fanfare.” A short-term method of doing this, according to the publication, would be Daimler not filling vacant posts. However, Manager Magazin says to cut costs to Källenius’ requirements, Daimler’s relationship with other manufacturers, such as its partnership with Renault-Nissan, will also likely come to an end. 

The publication says the current technical partnership with Renault-Nissan, which sees the companies sharing vehicle platforms, engines, and a joint factory in Aguascalientes, Mexico, will be axed—once again, Manager Magazin cites no sources. That said, the technical partnership between the companies have seen corporate friction as of late due to the ouster of Renault-Nissan’s former chairman Carlos Ghosn after he was accused and arrested for alleged financial and criminal misdeeds in Japan. Though issues continue, the partnership has yielded fruitful models, including the Mercedes-Benz CLA/GLA platform that Nissan/Infiniti runs as a QX30. Mercedes-Benz also recently revealed the X-Class, which rebadges Nissan’s Navaro pickup truck. 

The report further states that Daimler and Källenius’ cost savings are set to take effect by 2021, which would be a drastically fast turnaround for those involved. We’ve reached out to both Daimler and Renault-Nissan for comment and will update this article once we have more information.