Unveiling Mercedes - Benz China's “N + 9” Lay - off: A Comprehensive Response to New - Energy Vehicle Start - ups

Text | Xu Caiyu Editor | Li Qin, Yang Xuan

Mercedes-Benz China is undergoing a large-scale organizational adjustment.

36Kr previously reported that at the beginning of 2025, Mercedes-Benz announced a number of measures to "increase costs and improve efficiency". These include introducing a new assessment system in the R & D system to improve efficiency and optimizing the production lines in the production system. (Click to jump to the original article for more details)

Shortly after the Spring Festival holiday, Mercedes-Benz introduced new cost - cutting and efficiency - improving policies.

On February 26th, Mercedes-Benz China announced a personnel adjustment notice: it plans to lay off 15% of its staff, mainly involving the finance and sales systems. These businesses are mainly concentrated in Mercedes-Benz (China) Automobile Sales Co., Ltd. and Mercedes-Benz Auto Finance Co., Ltd.

According to public information, both of these subsidiaries are wholly-owned by Mercedes-Benz. However, a Mercedes-Benz insider told 36Kr that "in fact, regardless of the entity, the sales and service system of Mercedes-Benz is currently under the management of Beijing Mercedes-Benz Sales Service Co., Ltd."

36Kr has learned that as of now, the R & D system with Mercedes-Benz (China) Investment Co., Ltd. as the main body has not been affected by this layoff.

An insider told 36Kr Auto that the employees laid off in this round will receive compensation based on the standard of "N + 6"; if an employee signs the relevant layoff agreement during the interview, Mercedes-Benz will additionally give the employee three months' salary as compensation.

The last departure date for the laid-off employees is April 30th. If a laid-off employee has not found a new job during this period, they can still receive the salaries for March and April. That is, in this layoff, the laid-off employees are likely to receive 11 months' salary as compensation.

A Mercedes-Benz insider told 36Kr that most of the employees on the layoff list this time are those with open-ended contracts, and there are even many long - term employees who have worked for Mercedes-Benz for 10 years.

In 2024, although Mercedes-Benz ranked among the top three luxury car brands in China in terms of sales volume, the obvious decline in sales figures led to a downward trend in revenue and profit in the financial report. The profit even decreased by 28.4% year - on - year.

In the Chinese market, traditional luxury brands such as Mercedes-Benz are obviously facing the competitive pressure from the rapid rise of Chinese new car - making companies. From products to sales channels, there is a comprehensive confrontation.

In order to cope with the more intense market, Mercedes-Benz is bound to launch a full - scale adjustment storm from R & D, production to sales and service.

Mercedes-Benz in China for More Than a Decade: From Expansion to Contraction

Since 2012, Mercedes-Benz has experienced a "golden decade" of development in China. During this period, Mercedes-Benz began to build its huge system in China.

Currently, Mercedes-Benz has four main systems in China: sales and service, finance, production, and R & D. The sales and service system is responsible for the marketing, pre - sales and after - sales services of Mercedes-Benz products in China; the finance system provides financial services such as auto loans and leasing for individuals and enterprises.

The production system consists of factories. Currently, Mercedes-Benz has two factories in Beijing, producing more than a dozen models such as the long - wheelbase C - Class and long - wheelbase E - Class. In the R & D system, Mercedes-Benz has two R & D teams in Beijing and Shanghai, which are responsible for the R & D work related to the whole vehicle and digitalization respectively.

An insider told 36Kr that among the above four systems, "BMBS (sales and service system) has the largest number of employees and the most complex business."

Mercedes-Benz began to attach importance to the Chinese market in 2012. That year, Mercedes-Benz dispatched a board member to China to be responsible for improving Mercedes-Benz's performance in the Chinese market. The first thing the new CEO did after coming to China was to reorganize the sales team.

Since then, the layout of Mercedes-Benz's sales network in China has accelerated. In 2012, Mercedes-Benz had less than 50 stores in China, but 75 new stores were added the following year. In the past two years, the number of Mercedes-Benz stores has exceeded 700.

Correspondingly, Mercedes-Benz also entered a "golden decade" of development in China. The sales volume in the Chinese market continued to grow. In 2022, the revenue of Mercedes-Benz in the Chinese market reached 27.324 billion euros (approximately 208.4 billion yuan).

Against the background of the simultaneous growth of Mercedes-Benz's sales volume and sales network in China, the number of employees in the sales and service company also increased.

An insider told 36Kr that "although Mercedes-Benz operates under the dealership model, the company still needs to have its own employees. One is to be responsible for overall planning, and the other is to send people to connect with stores in various regions. This system has thus 'grown'."

Mercedes-Benz's personnel system has also become one of the obstacles to its "turnaround" later.

A Mercedes-Benz insider told 36Kr that Mercedes-Benz's personnel system is relatively friendly to employees. New employees sign a three - year contract for the first time, a two - year contract for the first renewal, and an open - ended contract for the second renewal.

Compared with the "employees who have worked for 10 years or more should sign an open - ended labor contract" stipulated by the labor law, Mercedes-Benz's personnel system reflects its humanistic care. "Because the company's system is friendly and the working atmosphere and colleague relationships are also good, Mercedes-Benz has a large number of 'long - term employees'."

In recent years, Chinese local auto brands have gradually grown, and the competition that Mercedes-Benz faces has become more and more intense. The continuously declining revenue and profit figures in the financial report have forced Mercedes-Benz to start considering cost - cutting and efficiency - improving measures.

Consistent with Mercedes-Benz's starting actions in China more than a decade ago, the first step in cost - cutting and efficiency - improving now is the adjustment of the company's structure.

"The main reason for this layoff adjustment is the decline in sales volume, the operating difficulties or network transfer of dealers. Since the company wants to shrink the dealer system, it naturally doesn't need so many people in sales and service," an insider told 36Kr.

At the beginning of 2025, Mercedes-Benz officially announced some adjustment strategies for its sales system. This includes that Mercedes-Benz's dealer network will shift from the "scale expansion period" to the "quality and efficiency improvement period".

Behind such adjustments, the dealers of traditional luxury cars are indeed facing operating difficulties: the world's largest BMW "5S" store has closed, and the largest Mercedes-Benz and Audi stores in many places have been taken over by new Chinese car - making forces such as Wenjie.

A Mercedes-Benz dealer told 36Kr that "now we are basically selling cars at a loss and relying on manufacturer subsidies and after - sales services to make money. The sales and cash - flow pressure on dealer groups is very high."

Dealers must sell a sufficient amount of products to receive corresponding manufacturer subsidies. In the first three quarters of 2024, Mercedes-Benz's sales volume in China was 512,200 vehicles, a year - on - year decrease of 10.2%. "Now cars are not as easy to sell as before, and many dealers are barely holding on."

36Kr has learned that only Huawei Hongmeng Zhixing has received more than 30 dealers who have switched from "BBA". According to the prediction of the China Automobile Dealers Association, more than 4,000 dealers will withdraw from the network in 2024.

Mercedes-Benz has chosen to actively optimize its dealer network. Reducing the number and streamlining the process are inevitable steps. This is not only a way to maintain the good operation of dealers but also a powerful measure for Mercedes-Benz to cut costs and improve efficiency internally.

Along with the major adjustment of the terminal sales network, Mercedes-Benz has started personnel optimization internally. An insider told 36Kr that "with fewer stores, there is no need for so many people to connect. It's actually a good thing for both the company and the employees."

After the layoff notice was issued, the laid - off employees showed little resistance. Instead, the current employees began to worry, because for the remaining employees, "the layoffs will definitely continue. According to the company's situation and goals, those laid off later may not receive so much compensation."

Mercedes-Benz's Transformation: Adjustments Will Continue

A Mercedes-Benz insider told 36Kr that "whether it's the joint - venture company, Mercedes-Benz China, or the German headquarters, the two key tasks this year are organizational streamlining and turning the financial report positive."

Mercedes-Benz's immediate concern is to reverse the performance of its financial report as soon as possible and enhance the confidence of all sectors of society in Mercedes-Benz.

At the latest quarterly earnings conference call, Mercedes-Benz executives said that the company's cost - cutting will cover all types of costs, including personnel costs, and cost - cutting measures will be implemented in all countries and regions.

In the Chinese region, Mercedes-Benz has sent multiple signals of short - term cost - cutting and efficiency - improving.

In addition to adjusting the dealer system and laying off 15% of the staff in the finance and sales service systems, 36Kr previously reported that Mercedes-Benz China's R & D system will introduce a more efficient and specific assessment system to improve project efficiency; its production system will also be upgraded to improve unit efficiency.

A Mercedes-Benz employee told 36Kr that "Tong Oufu, the new CEO of Mercedes-Benz China, has a financial background. At a previous conference, he once proposed the idea of 'Volume 2.0' and believed that it was necessary to improve the internal efficiency of Mercedes-Benz."

This new CEO officially took office after the Chinese Lunar New Year. One of his missions is to improve the operating conditions of Mercedes-Benz in the Chinese region.

However, besides the immediate concerns, there must be long - term concerns.

The real purpose behind Mercedes-Benz's layoffs is to reorganize its Chinese team and reverse the organizational attribute of sales - led and R & D - assisted. It aims to let the Chinese R & D team play a greater advantage and create more and better products.

The current scale of Mercedes-Benz's R & D team in China has exceeded 2,000 people, but most of them are engaged in the localization adaptation and development work of Mercedes-Benz models in China.

An insider told 36Kr that Mercedes-Benz Germany is responsible for the 0 - to - 1 development of products. At the prototype stage, Germany will send the prototype and drawings to China.

The Chinese team then needs to develop and test parts according to the drawings with the Chinese branches of the suppliers designated by Germany, and finally launch models such as the long - wheelbase E - Class into the market.

The authority of the Chinese team is centered around the models produced locally. As for core areas such as engine R & D and vehicle development, the Chinese team has not been very involved in the past. 'Mercedes-Benz's attitude in the past was rather arrogant, seeing the Chinese market as a cash cow.'

The source of Mercedes-Benz's sales growth is the continuous expansion of its sales network. During the expansion process, the head office has also been continuously recruiting employees to support the expansion of the dealer network.

A person who has worked for Mercedes-Benz for 15 years told 36Kr that there are indeed many employees in Mercedes-Benz's sales system, but there is a lot of internal friction and low efficiency. "When cars were easy to sell, there were fewer contradictions between dealers and Mercedes-Benz. But when cars are hard to sell, it's obvious which people and processes in the intermediate links are useless."

In the view of some long - term employees, it is very necessary to cut redundant organizations. A heavy - burdened organization will only slow down Mercedes-Benz's transformation. 'Only when the performance is good will everyone be good. If we are dragged down, we will all have to disperse.'

In the current market, the advancement of products and technologies is the core of a company's continuous growth.

Learn from Chinese Companies: Start with Intelligentization

36Kr has learned that Mercedes-Benz's board chairman Ola Källenius and a group of other executives visit China every year for competitor research.

"The bosses were shocked by the Li L9 and asked us to use it as a benchmark in the future. The intelligent driving of the ZJ S7 is also our learning target now."

The growth rate of Chinese self - owned brands has made Mercedes-Benz realize that the Chinese auto industry has achieved better results in some fields. Mercedes-Benz must quickly make up for its deficiencies in electrification, especially in intelligentization.

The establishment of Mercedes-Benz's Shanghai R & D center is the beginning. Moreover, in 2024, Mercedes-Benz increased its investment in the Chinese market by more than 14 billion yuan.

36Kr previously reported that regarding the local production of the GLE, Mercedes-Benz's board chairman Ola Källenius insisted on whether the model could achieve 100% localization. (Click on the original article for more details)

A Mercedes-Benz insider told 36Kr that the importance of the Chinese R & D team is indeed further increasing. In the development of new models, the Chinese team will be more involved.

Especially in the field of intelligentization, which is developing faster in the Chinese market, Mercedes-Benz is now relying more on the Chinese team. "Mercedes-Benz's intelligentization team expanded its staff recently. They are now conducting closed - door development in Suzhou to make the final preparations for the launch of MB.OS."

As the importance of the R & D system continues to increase and the sales and service system is streamlined, Mercedes-Benz China will move towards a new organizational model that emphasizes R & D and de - emphasizes sales.

At the beginning of 2025, within two hours of the release of the Xiaomi SU7 Ultra priced at 529,900 yuan, the number of orders exceeded 20,000. The ZJ S800 priced at 1 million - 1.5 million yuan is targeting the high - end luxury market. Chinese self - owned brands are gradually attacking the profit hinterland of traditional luxury brands.

Facing the competition, Mercedes-Benz is not sitting idle. Mercedes-Benz's layoffs are not a sign of poor business operation but one of the signals for Mercedes-Benz's transformation plan to start.