Mercedes-Benz Cuts Job in China with Growing Competition

Mercedes-Benz may cut up to 15% of its workforce in its biggest market; most of the job cuts will come from finance and sales departments, becoming the latest in global car makers tucked in gear to stave off competition from French rivals Renault and PSA Peugeot Citroen.

Which Areas Will Bear the Brunt?

These cuts will more than likely hit Berlin-based subsidiary Mercedes-Benz Auto Finance Co. and Beijing Mercedes-Benz Sales and Service Co., which have been under attack by Chinese banks that are beating them for market shares by offering lower prices for auto loans.

Fixed-term contractors who may not have their contracts renewed are already being let go in this month due to the acceleration in the layoff pace; however, the final figure is not yet known and the end figure is expected to be below 15%. 

It remains unclear how the losses will affect Mercedes-Benz’s headquarters in China or possibly even its joint-venture production units with domestic companies.

Global Concerns-Decline in overextending over stock market Jitters

Such challenges are not faced by Mercedes-Benz alone. Even now, other foreign car companies face stiff competition in China. Local brands like BYD are fast becoming more favored due to their durable and high-tech electric models. It even narrows China’s economy, which has left customers watching their wallets more rigorously than before these developments.

At the same time, certain changes have been reported for other car companies:

Porsche reportedly downsized its workforce last year in China.

BMW did not renew some of its local contracts in the country, which affected 2% to 5% of its Chinese workforce.

Falling sales in China

Mercedes-Benz announced last month a 7% decrease in its 2014 sales in China and global deliveries. 

Foreign automakers will need to adapt to China’s changing market as more and more compete with one another.

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