Mercedes Reports A Significant Decline In Earnings

German luxury carmaker Mercedes-Benz has unveiled a plan to increase sales and cut costs after its annual business report showed a significant drop in profits, primarily due to weakening business in China.

“To ensure the company’s future competitiveness in an increasingly volatile world, we are taking steps to make the company leaner, faster, and stronger,” said CEO Ola Kallenius. The company’s net profit fell by 28 percent compared to the previous year, to 10.4 billion euros, the DPA agency reported.

In China, the company’s most important market, customers have chosen fewer Mercedes vehicles than before, leading to a sharp drop in profits compared to previous years. According to a business report, Mercedes sold just over 1.98 million cars last year.

The executives presented a plan to turn around the business in the coming years through a savings program and lower production costs.

Chief Financial Officer Harald Wilhelm said the passenger car division’s profitability should return to double digits by 2027, after falling to 8.3 percent in 2024 from 12.6 percent in 2023. Production costs should be reduced by 10 percent by 2027, as well as fixed costs.

Global capacity at Mercedes passenger car factories is set to decrease from 2.5 million units to between two and 2.2 million units by 2027.

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