Thought Leadership
Mercedes-Benz is digging deep into its pockets to implement its cost-cutting program. Up to 500,000 euros in severance pay is possible for long-serving managers.
Mercedes-Benz is stepping up its cost-cutting measures and relying on voluntary redundancies among its employees. As part of the previously announced “Next Level Performance” program, the premium manufacturer aims to save around five billion euros by 2027. The company is now offering high severance payments in order to achieve the targeted staff reductions.
According to Handelsblatt, Mercedes is planning to encourage up to 30,000 employees to leave the company voluntarily. The amount of severance pay will be based on position, length of service and salary level.
The 30,000 employees affected are to receive individual written offers by the end of April. Team leaders and foremen will also be approached. Works Council Chairman Ergun Lümali emphasizes the principle of double voluntariness: “Anyone who wants to leave the company does so voluntarily and at their own request.” There is no compulsion to leave.
Six-figure sums for long-standing employees
Sample calculations show the dimensions: A 55-year-old team leader with 30 years of service and a gross monthly salary of 9,000 euros can expect a severance payment of up to 500,000 euros. A 45-year-old clerk with 20 years of service and a monthly salary of 7,500 euros would receive over 300,000 euros, as Südwest24 also reports. Even younger employees are being made attractive offers – an employee in their mid-30s with a gross salary of 6,000 euros could receive around 100,000 euros.
Background: Industry crisis and pressure to transform
The massive job cuts are part of a series of similar measures in the German automotive industry. The industry is struggling with several challenges at the same time: falling sales figures, increasing competitive pressure, particularly from China, high investment in electromobility and rising production costs.
Mercedes CEO Ola Källenius and Works Council Chairman Lümali informed the workforce about the measures in a joint video message. The Group referred to the increasing pressure on the German automotive industry. The weakening business in China in particular had caused Mercedes to suffer significant profit losses last year.
At Mercedes, employees in production, sales and administration are currently affected by the cost-cutting measures. However, administrative employees enjoy protection against dismissal until the end of 2034 under a works agreement – which explains the high severance packages on offer.
