The German automobile industry is currently in a tough situation, and reduced demand for some models is forcing manufacturers to make difficult decisions. Mercedes has announced that it will reduce production of its S-Class.

Automakers are facing major challenges, battling China’s ongoing price war in the automotive sector, particularly in high-end models, and the high development costs associated with new technologies and electrification. The decision to reduce production is something that was expected, and according to a Mercedes spokesperson, the transition to single-shift work is set for the last quarter of this year. This will affect nearly 1,500 employees, some of whom will be redeployed to other production sectors at the Sindelfingen plant.

In Q2, Mercedes sold just 33,400 cars from its S-Class (EQS, EQS SUV and GLS), which is a drop of 25 percent compared to 44,200 cars sold in the same period last year. The biggest decline was recorded in the markets of Europe (-27 percent), USA (-19 percent) and China (-13 percent). Also, the share of these premium segment vehicles in total sales fell from 16 percent to 14 percent, which contributed to the reduction of the profit margin in the company’s automotive business from 13.5 percent to 10.2 percent.

It is currently unknown if and when two-shift operations will return to Factory 56. Broader industry trends, including Audi’s consideration of closing its Brussels factory due to slow sales of the Q8 E-tron, suggest the luxury electric vehicle market is facing a broad widespread challenges.

Source: Mercedes-Benz