Mercedes outlines cost cuts with 2025 earnings seen lower

GERMAN luxury carmaker Mercedes-Benz Group expects earnings to be significantly lower this year and will cut production costs to boost profitability.

The carmaker plans to slash production costs by 10 per cent by 2027, after recording a 30 per cent decline in earnings before interest and taxes for 2024, according to a statement on Thursday (Feb 20). Mercedes did not specify how it planned to reduce costs.

Mercedes’ carmaking margin dropped to 8.1 per cent for the full year, below the previous year’s 12.6 per cent and in the mid-range of guidance for 7.5 to 8.5 per cent result.

Mercedes has been grappling with weaker demand in China for its top-end vehicles such as Maybach limousines, AMG performance cars and the G-Wagon.

Under chief executive officer Ola Kallenius, the company has been directing resources to its most expensive vehicles and moving away from less profitable entry-level models such as the compact A-Class.

Rising trade tensions and US President Donald Trump’s threat to impose car tariffs are weighing on Mercedes, which imports about 63 per cent of the vehicles it sells in the US. President Trump said this week that he plans to announce as soon as April, levies of around 25 per cent on imported autos.