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Mercedes-Benz Implements Salary Cuts for Executives
2024-12-20 21:46:31
Automotive
Business

Mercedes-Benz Implements Salary Cuts for Executives

Mercedes-Benz is taking significant measures to address the challenges within the automotive industry. The company has decided to halt salary increases and home office privileges for its executives, impacting thousands globally.

This strategic move aims to reduce personnel costs by several billion euros annually, responding to the current economic climate and declining sales. While bonuses and stock options remain intact, a mandatory return to office presence is set for 2025. These adjustments reflect the company's effort to streamline operations and ensure long-term viability amid a downturn in the market, particularly in China and electric vehicle sales.

The decision underscores the urgency for automotive leaders to adapt in these turbulent times.

Related news on that topic:

Volkswagen's Transformation Amid Economic Challenges

Volkswagen is undergoing a significant transformation, driven by intense competition and the shift toward electric vehicles. The company plans to lay off over 35,000 workers in Germany by 2030, citing high labor costs and the need for greater profit margins to stay competitive. This restructuring will also see a reduction in vehicle production capacity by more than 700,000 units. Negotiations between Volkswagen and the union have resulted in agreements to avoid compulsory layoffs and plant closures, though the reduction in positions remains "painful." As part of cost-cutting measures, around 4,000 managers will face salary reductions ranging from 5% to 10% until 2030. These cuts are aimed at involving management in the financial solution, as emphasized by union representatives. Volkswagen’s strategy includes launching nine new models by 2027, with a focus on leading the electric vehicle market in Europe. The company aims to have at least three models in the EU's top ten rankings. Production changes are planned, such as shifting the Golf production to Mexico and focusing on electric models like the ID.3 at its Wolfsburg plant. Despite these adjustments, Volkswagen assures a socially responsible approach to the job cuts, with a commitment to employment security until 2030. The company's leadership acknowledges the emotional toll these changes have on employees, emphasizing the need for a clear future perspective. As the industry evolves, Volkswagen aims to remain a stable and reliable employer by adapting to new market demands.

Volkswagen's Balanced Approach to Crisis Management

Volkswagen has devised a comprehensive savings plan to navigate financial challenges without resorting to mass layoffs or plant closures. The plan involves a 10% salary reduction for 4,000 managers over the next couple of years, with further reductions planned until 2030. This move is part of a socially responsible job reduction strategy that will see the elimination of 35,000 positions without forced redundancies. Production will be scaled down by 734,000 units, equivalent to the output of two to three plants. The company aims to save 1.5 billion euros annually, with employees agreeing to forego wage increases and bonuses. Despite the production cuts, Volkswagen plans to introduce nine new models by 2027 to maintain competitiveness. The decision not to close plants has been met with relief, particularly in Emden. Meanwhile, Volkswagen's leadership and the workers' council have reached a compromise, ensuring that the financial burden is shared among managers, employees, shareholders, and the company itself. The plan has been welcomed by stakeholders, with calls for further political support to ease bureaucratic hurdles and reduce taxes. This strategy exemplifies a balanced approach to managing economic difficulties while safeguarding jobs and future growth.

Read 2 more recent news on this topic

The press radar on this topic:

sueddeutsche
20. Dezember 2024 um 16:29

Automotive Crisis: Zero Round for Mercedes Managers - and the End of Remote Work

Economy
The crisis of the German automakers is hitting Mercedes - also at the management level. Managers are not supposed to receive a salary increase in 2025. And they are supposed to appear in the office five days a week.
Tagesspiegel
20. Dezember 2024 um 18:38

Savings plans also hit management: Mercedes cuts pay raises for executives

Economy
Finance
Mercedes-Benz is cutting pay raises and home office for executives; Reduction of personnel costs to save costs; Presence requirement planned from 2025.
zeit
20. Dezember 2024 um 18:09

Automotive Group: Mercedes Benz Cancels Salary Increases for Executives

Economy
Mercedes-Benz is canceling salary increases and home office for executives in order to reduce costs and make the company competitive in the long term.
CW

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