Mercedes-Benz is changing its game plan. Electric vehicle sales have taken a nosedive, and profits are shrinking. To cope, the automaker is cutting back on global production. It’s also rethinking its push towards electric cars, shifting focus back to traditional combustion engines. Mercedes expects a rough 2025, with earnings likely to take a big hit. Going back to reliable gas-powered models could help soften the blow. To keep costs down, the company is also tightening its production budget over the next two years. It’s not giving up on electric cars, though. Nearly half of the 40 new models planned by 2027 will be battery-powered. But Mercedes isn’t going all in on electric just yet. It’s keeping one foot firmly in the combustion engine camp, at least for now. Read More Gordon Murray’s Special Vehicles Division Will Build Your One-Off Dream Car Mercedes Bets on Luxury Over Volume Mercedes-Benz is taking a different route to boost profits. Instead of trying to sell more cars, it’s focusing on selling fewer but pricier models. The plan is to move upmarket, leaning heavily into luxury. This means you’ll likely see fewer entry-level cars like the CLA, GLA, and GLB-Class. In their place, expect more high-end sedans and SUVs like the S-Class, GLE, and GLS. It’s not just about selling expensive cars. Mercedes wants to make its lineup feel exclusive. So, limited editions and one-off models are on the way. Despite the EV buzz, Mercedes is planning to launch 19 new gas-powered models by 2027, compared to 17 electric vehicles. The strategy makes sense, especially with electric vehicle sales dropping by 25% last year. Cutting Costs and Moving Production Mercedes-Benz is scaling back production at its German factories, dropping from one million to about 900,000 cars a year. No factories are shutting down, but job cuts are expected. CEO Ola Kallenius didn’t say how many, but he did admit the company needs to get “faster, leaner, and stronger” to stay competitive. The automaker’s profits took a serious hit last year. Earnings fell by 30%, and the car division’s profits plunged 40%, thanks largely to losing market share in China and Germany. Read More Manhart Just Gave Porsche 911 GT2 RS Nearly 1,000hp – Can You Handle It? To fight back, Mercedes is looking for ways to save money. It’s talking to suppliers to cut costs on key materials like chemical coatings and metals. And it’s planning to slash expenses by 10% by 2027, with even more cuts lined up for 2030. Part of the cost-cutting plan is to move production to cheaper places. At least one model line is leaving Germany for Hungary, where it’s 70% cheaper to build cars. Mercedes is also shifting more production to America and China to avoid potential tariffs. The financial outlook is tough. The car division made €8.7 billion ($9.1 bn) last year, a 39% drop from the year before. And 2025 isn’t looking much better. With profit margins expected to fall to just 6%, Mercedes is making bold moves to weather the storm. Source: Mercedes-Benz
