Daimler Truck Plans to Cut 5,000 Jobs in Germany Amid Cost-Cutting Strategy

Daimler Truck has announced plans to cut approximately 5,000 jobs in Germany over the next five years as part of its strategy to relocate Mercedes-Benz truck production to more cost-effective countries. This decision is part of a larger cost-reduction initiative in Europe aimed at saving over €1 billion (approximately $1.17 billion). The layoffs may occur through natural attrition, expanded early retirement options, and targeted redundancy plans. The company stated that the job cuts will reduce the workforce at its German headquarters and administrative departments by 20% from 2024 to 2030, and sales positions will see a 15% reduction. The layoffs will primarily affect the Leinfelden-Eckerdingen plant near Stuttgart, which employed around 28,000 people at the end of last year. Daimler Truck operates five major factories in Germany with a total workforce of about 35,500. In addition to reducing labor costs, the company plans to cut expenses in materials, management, IT infrastructure, and R&D. Daimler Truck also announced a business restructuring plan aimed at enhancing profitability through improved operational efficiency, streamlined processes, expanded service offerings, and balanced investments in diesel and zero-emission technologies. The company aims to increase its adjusted return on sales in industrial operations to over 12% by 2030, revising its target range to 9% to 13%, up from the previous 7% to 11%. For 2024, the company's return on sales stands at 8.9%. Moreover, Daimler Truck plans to achieve organic revenue growth of 3% to 5% annually by 2030, driven by defense business, sales of zero-emission vehicles exceeding 25,000 units in the European market, growth in the Indian market, and promoting high-margin service operations in North America along with specialized truck business. The profit margin guidance for the North American truck business has been raised from 9% to 12% to 10% to 14%. However, analysts from Bernstein have described this target as 'extremely challenging,' noting that while Daimler Truck achieved a 13% profit margin in North America in 2024, it was during a time of significant supply-demand imbalance and order backlogs. Although the company is committed to minimizing the impact of layoffs on employees, these cuts reflect broader industry trends, as many manufacturing companies, including those in the automotive sector, adapt to new realities such as the transition to electric vehicles, advancing automation, and increasing cost-cutting pressures in an uncertain economic environment.