Daimler AG plans to eliminate more than 10,000 jobs worldwide to revive profit margins squeezed by heavy investments in electric and self-driving vehicles, following on the heels of rivals BMW AG and Volkswagen AG’s Audi division in mapping out cost savings.
The cuts -- equal to at least 3.3% of the workforce -- will be carried out by the end of 2022 as part of efforts to reduce personnel spending by 1.4 billion euros ($1.5 billion), the maker of Mercedes-Benz cars said Friday in a statement. The company plans to widen early-retirement programs and offer buyouts to reduce administrative staff in Germany.
The total number of jobs to be reduced worldwide is in the “low five-digit range” and includes shedding 10% of management positions, Wilfried Porth, Daimler’s personnel chief, told reporters on a conference call. A labor agreement ruling out forced layoffs until 2029 remains in effect.
The world’s top producer of luxury and commercial vehicles set the scene for the cutbacks earlier this month when new Chief Executive Officer Ola Kallenius warned returns may remain depressed for the next two years. A target for 2020 of at least 4% operating return on sales at the main Mercedes cars unit disappointed investors, coming in at less than half of what French mass-market peer PSA Group generated in the first half of this year.
“We will make the measures as socially responsible as possible,” Porth said in a separate statement.
The Stuttgart-based automaker’s shares fell 0.6% to 51.64 euros as of 12:03 p.m. in Frankfurt trading. The stock has climbed 12% this year to value the company at 55 billion euros.
Automakers have unveiled plans for record investment to develop new technology to meet stricter emissions regulations in key markets. At the same time, global demand for new vehicles is softening after a decade of almost uninterrupted growth fueled by China.
Both Audi and BMW revealed plans this week for cutbacks after talks with unions. Audi plans to cull as many as 9,500 jobs in Germany, or roughly 15% of its workforce, to lift earnings by 6 billion euros. BMW hammered out a labor pact that included lower bonus payments for employees in Germany.
Daimler will offer to reduce weekly work hours and allow contracts for most temporary workers in administrative roles to expire.
The terms of Daimler’s existing collective bargaining agreement, including a scheduled pay raise next year, remain unaffected by the cutbacks, the automaker’s works council said in a separate statement.