Mercedes is the latest German brand to recognize that it is affected by the crisis in the Chinese car market. The brand from Stuttgart must save billions.
Mercedes is facing extensive cutbacks due to a significant drop in sales in the Chinese market.
In order to understand the seriousness of the situation and find solutions, the board recently visited China in particular, where they analyzed the challenges and assessed the competitors' development.
According to the latest quarterly accounts, Mercedes has had to say goodbye to a dramatically large part of the group's profits over the past three months.
Therefore, the management is also forced into several savings exercises to bring costs down.
This development has led to an increased focus on reducing costs. The German media Handelsblatt writes that the car manufacturer wants to implement further savings measures to patch up the economy.
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Already in 2020, Mercedes initiated a savings program that aims to reduce fixed costs by 20 percent by 2025. That is, compared to the level in 2019.
Until now, it has been possible to achieve a reduction of between 15 and 16 percent. Nevertheless, Mercedes' financial director, Harald Wilhelm, believes that it is not sufficient in light of the current challenges in China.
During their recent visit to China, Mercedes management focused on studying the local market and technological advances.
They also examined the cars of Chinese competitors and noted technological developments in assistant systems and self-driving cars.
In addition, agreements were made with local companies on cooperation in areas such as 'intelligent driver solutions'.
Due to the continuing challenges in China, Mercedes has decided to expand the brand's savings program. The goal is to reduce costs further, corresponding to a double-digit billion amount in Danish kroner annually in addition to the already planned savings.
According to Handelsblatt, Mercedes is finding it difficult to achieve a strong position in the electric car market in China. If market share continues to decline, current measures may prove insufficient.
The weak sales figures in China combined with competition from local manufacturers are pushing Mercedes to adapt faster. The situation underlines the need to continue to streamline production and develop competitive products in the world's largest car market.
Mercedes is also having a hard time in the American market. Especially when it comes to electric cars. Already last year, Boosted was able to tell how the brand's dealers complain that customers are leaving. Read more about it here .
