Mercedes-Benz to cut headcount, lower pay increases amid cost-cutting drive

FRANKFURT (Reuters) - Mercedes-Benz has won agreement from its works council to offer buy-outs to staff and reduced planned salary increases by half, it said on Tuesday, part of a wider cost-cutting drive as the carmaker battles to revive earnings.

The company declined to specify how many jobs will be cut, but said workers in production would not be affected and that redundancies had been ruled out, with management agreeing to extend a job security guarantee until the end of 2034.

CFO Harald Wilhelm said at the carmaker's annual results conference last month that it planned to outsource areas from finance and human resources to procurement, reducing the size of the workforce through not replacing workers who retire and negotiating voluntary redundancies.

Mercedes-Benz plans to reduce production costs by 10% by 2027 and double that by 2030, beyond an ongoing plan launched in 2020 to reduce costs by 20% between 2019 and 2025.

Europe's auto industry faces a swathe of challenges this year, with carmakers and component makers announcing deep cuts and Germany's powerful unions putting up a fierce fight against pressure by management to cut jobs, close factories and move staff abroad.

(Reporting by Ludwig Burger, Victoria Waldersee, Editing by Friederike Heine)

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