Mercedes wants to freeze spending, the German brand has serious economic problems

The situation in the European and international market is strange, tense. The resurgence of China as an automotive superpower has meant a change in the status quo traditional. China is now the largest market in the world. With more than 30 million registrations per year, it sells more than the regions of Europe and the United States combined. The future of the brands is closely linked to Chinese success. Mercedes is not reaping the expected records. Sales have fallen as have profits. In Stuttgart he has no choice but to tighten his belt.

In 2023, China represented 36% of Mercedes’ total sales worldwide. One in every three cars the company sold was registered in just one country. A sign of the great dependence that the Germans have on the East. The appearance of new manufacturers such as NIO, XPeng or YangWang have caused a movement of customers. Mercedes is no longer the only premium brand on the Chinese market, nor is Audi or BMW. Today local manufacturers are able to almost match, or equal, the premium terms that have always made the German trident the largest within the top range.

China is the cause of Mercedes’ profit loss

At the end of last October, Mercedes reported a drop in profits. The third quarter has not been good. The group’s income has fallen by more than half, to 1.72 billion euros, compared to the same period of the previous year. Total registrations have decreased by 6.7% to a revenue volume of 34.5 billion euros. Needless to say, within the company they expected completely different data. Even then Mercedes assured that it was going to pay more attention to costs and efficiency.

In Stuttgart they want to remove every last stone of the company. They want to analyze where spending can be frozen or cut. A company spokesperson has told an important german newspaper his austerity measures: “in the coming years we will reduce our costs by several billion euros per year”. This spokesperson did not want to specify the magnitude of the figures.. Nor has anyone wanted to clarify whether jobs are at risk. It is not the first sign of weakness from a German brand. Volkswagen is already working on major personnel and spending cuts.

Mercedes justifies the austerity measures because of the tense situation in the automobile industry. The aforementioned spokesperson has made clear the moment the market is going through: “the economic situation continues to be extremely volatile around the world. Only through a sustained increase in efficiency can financial strength and the ability to act be maintained. Significant savings, including fixed costs, would have put the company in a good starting position. “We continue down this path calmly but with extreme coherence.” Spending will be cut and frozen, but without reaching extreme austerity measures.