AsianFin -- Mercedes-Benz and its subsidiaries are set to reduce their workforce in China by up to 15%, according to a report by Bloomberg on Thursday, citing sources familiar with the matter.

The layoffs will primarily affect the company’s financing and sales divisions, specifically Mercedes-Benz Automobile Finance Co and Beijing Mercedes-Benz Sales Service Co.

Job cuts have already begun, including the non-renewal of contracts for some fixed-term employees, with the pace of layoffs increasing this month, Bloomberg reported.

In addition to the workforce reductions, Mercedes-Benz announced last week that it would implement further cost-cutting measures and prioritize petrol and diesel cars over electric vehicles (EVs) in its new product lineup, as part of a strategy to revive profit margins ahead of expected earnings declines in 2025.

European automakers and auto parts suppliers are facing increasing pressures, including high energy and labor costs, weakening demand, and growing competition from China, prompting plant closures and large-scale layoffs.