
Daimler to cut 10,000 jobs in the next three years
- Daimler announces its plan of cutting as many as 10,000 jobs in the next three years.
- U.S-China trade tension leading to declining sales in China highlighted as reasons for cost cutting.
- Daimler aims at raising $1.54 billion with the cost cut to invest in self-driving and electric cars.
- BMW and Audi has also announced similar strategies earlier this week.
- Daimler's stock performed well in 2019's first half but lost traction with the start of the second half.
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The German multinational automotive corporation, Daimler, announced on Friday that it plans on cutting as many as 10,000 jobs in the upcoming three years. The company cited dwindling sales and its intent of making a rather sizeable investment in electric vehicles as the primary reasons why it sees cutting jobs as a necessary strategy.
U.S – China Trade Tension Cited As The Primary Reason For Cost Cutting
Copy link to sectionGerman car manufacturers have remained under pressure this week owing to the rising trade tensions between the United States of America and China. A sharp decline in sales in China, that has the reputation of the largest market for car companies, added to the pressure as well. With the majority of manufacturers focusing on self-driving technologies and environment-friendly vehicles, for which huge investments are required, three of the leading names in automotive corporations (BMW and Audi being the other two) announced an upcoming cost-cutting strategy this week.
Upon reaching an agreement with labor unions, Daimler (owner of Mercedes – Benz) declared its plans of cutting 3% of its workforce in the next three years. In terms of management positions, 10% of the jobs can be expected to be cut across the globe. Other cost-cutting strategies that the labor unions support include the severance program in Germany and stretching the part-time retirement. Daimler has also suggested shorter working weeks as a potential source of cutting costs.
Daimler Aims At Raising $1.54 Billion With Its Staff And Cost-Cutting Strategy
Copy link to sectionAs per the report at the end of 2019’s third quarter, Daimler currently has a huge workforce comprising 304,680 employees. Analysts of the stock market have reported that laying off 10,000 jobs by 2022 is likely to save around $1.54 billion for the German multinational automotive corporation.
Apart from manufacturers, suppliers like Continental and Osram have also expressed plans of staff and cost cuts in the upcoming years. Daimler has reiterated on multiple occasions that the auto market is seeing a global slowdown that is weighing on its profit outlook at large. In its October’s statement, the company forecasted the group operating profit to drop sharply in 2019 as compared to that of last year.
The first half of 2019 remained positive for Daimler with share prices climbing up from €45 to around €60 in April. The high was almost immediately followed by consistent bear runs which brought the stock down to the year-to-date low of €40.53 in August. Ever since, Daimler’s stock has sufficiently regained and is currently trading at €51.20.
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