Mercedes-Benz is offering unusually large voluntary severance packages to some employees, reportedly up to €500,000. The generous buyouts are part of a broader effort to reduce costs and accelerate the automaker’s transition to electric mobility and digital systems, a shift that could save the company billions over the coming years.
The voluntary program has attracted attention both inside Germany and internationally, not only because of the size of the payouts but because it reflects how one of the world’s most recognized carmakers is managing workforce change. As Mercedes-Benz pivots toward electric vehicles and a leaner business model, it is seeking ways to lower expenses while avoiding forced layoffs.
The Five-Billion-Euro Plan
Image via iStockphoto/Marina113
Mercedes-Benz has set a target to save around €5 billion by 2027. The initiative, dubbed Next Level Performance, aims to streamline operations and adapt the workforce for the demands of electric vehicles. The plan emphasizes reducing administrative overhead and realigning costs in response to weaker sales in certain markets, including China.
In Germany, roughly 30,000 to 40,000 administrative employees are protected by job security agreements that prevent dismissals until 2034. Because outright layoffs are off the table, management pursued a voluntary approach to reduce staff numbers. The incentive program offers an alternative to compulsory redundancies and appears to be effective so far.
About 4,000 employees have reportedly accepted the voluntary offers to date, with some receiving as much as €540,000. The buyout program launched in April 2024 and runs through March 2026, giving eligible staff nearly two years to decide. Participants who act early can receive a “turbo bonus,” an additional payment as an incentive for quick commitment.
The program is open to engineers, IT staff, office workers, and mid-level managers. Payouts are calculated based on age, years of service, job level, and base salary. For example, a 55-year-old team leader with around 30 years at the company and a monthly salary near €9,000 could be eligible for about €500,000. Employees with 20 years of service might receive roughly €300,000, while younger staff could expect closer to €100,000.
Company leaders retain the right to refuse applications if an employee holds a critical or hard-to-fill role, but most voluntary exits are being approved, allowing the company to achieve reductions without compulsory layoffs.
Why Mercedes Is Doing This Now
The global auto industry is undergoing a major transition to electric vehicles, and the shift brings substantial costs. Batteries are expensive, manufacturing processes are changing, and demand for traditional engines is diminishing. Mercedes-Benz has also reported a roughly 12 percent drop in quarterly sales, largely driven by a slowdown in China, a market that has historically been a strong revenue source.
To remain competitive, Mercedes is investing heavily in electric and digital technologies. In 2024 the company opened a new electric-vehicle plant in Sebes, Romania, following an investment in excess of €100 million. These capital commitments increase the need to find savings elsewhere, making workforce adjustments a logical measure.
The voluntary severance approach enables Mercedes to reorganize without the social and operational disruption that can accompany mass layoffs. CEO Ola Källenius has described the program as a way to modernize the company while offering employees a fair choice. Those who remain will be part of a streamlined, future-oriented organization focused on electric mobility and digital capability.
Overall, the buyout program is intended to balance financial discipline with respect for employees’ circumstances. By providing significant incentives to those willing to leave voluntarily, Mercedes-Benz hopes to reduce costs, redirect investment toward new technologies, and position itself more strongly for the long-term shift in the automotive industry.