German carmaker Mercedes-Benz agrees cost-cutting package with staff

German luxury carmaker Mercedes-Benz has agreed a comprehensive package of cost-cutting measures with employees.

Management and the general works council have reached a deal that includes savings in workers' pay and an increase in worker flexibility allowing for more temporary work in production, a spokeswoman said on Tuesday.

The company presented a plan to increase sales and cut costs in February, after net profit plunged 28% in 2024 amid a wider struggle for Germany's key automotive sector, compounded by weak sales in China.

"We are playing in the automotive Champions League," said chief executive Ola Källenius in a statement, comparing the carmaking sector to Europe's top football competition.

"We have to become stronger, faster and hungrier," he added. "We have to attack ourselves. And that is exactly what we are doing."

The package of measures agreed with employees includes a voluntary redundancy programme for workers not involved in production.

The job security guarantee, which rules out compulsory redundancies for the company's 91,000 employees in Germany, has been extended from 2029 to 2034.

Senior managers, team leaders and members of the executive board will not receive a pay rise in 2025, as previously announced, the spokeswoman said.

The Stuttgart-based company is seeking to improve profitability, cutting costs in production by 10% by 2027.