Plummeting demand cuts S-Class, EQS production

MERCEDES-BENZ is once again reducing production at its historic “Factory 56” plant in Sindelfingen, Germany, as demand for large-segment S-Class and EQS-Class models plummets.

For the first time, the Mercedes-Benz S-Class models will be produced in just a single shift, with the facility’s almost 1500 employees told to prepare for cutbacks when they return from their August vacation period.

The cuts follow similar moves made last year and are set to commence from the fourth quarter of this year. Mercedes-Benz produces S-Class, EQS-Class, and related Maybach variants at the south German facility.

“It is planned to transfer production at Factory 56 to a single-shift operation in the fourth quarter and to deploy some of the employees in other production areas of the plant,” a spokesperson for the brand told German outlet Automobilwoche.

It is reported that the plant’s capacity has been underutilised for months as demand in the upper-large segment dwindles. Staff are expected to be reallocated to Hall 46 where the E-Class and GLC-Class are produced.

Combined output of Mercedes-Benz’s top four models – the S-Class, EQS-Class, EQS SUV, and GLS-Class – were just 33,400 units in the second quarter of 2024, a drop of nearly 25 per cent on the same time last year.

Automobilwoche says Mercedes-Benz’s profits have followed the downward trend, with top-segment margins falling from 13.5 to 10.2 per cent.

Sales of the Mercedes-Benz S-Class fell across all markets in the first half of 2024, the upper premium model down 13.0 per cent in China (to 10,430 units), 19 per cent in the United States (to 5026 units), and 27 per cent in Europe (to 4249 units).

A facelifted S-Class is due in 2025, though it’s not sure if this will be sufficient to return Sindelfingen to a two-shift rotation.

The news comes just weeks after competitor Audi announced it may consider shuttering its Brussels facility where its full-size Q8 e-tron is produced.

Slow sales of the model – and a broader slow-down in premium battery electric vehicle uptake – means a “restructuring of the site” is expected that “may also include a cessation of operations if no alternative is found”.

Audi has noted a sharp decrease in demand for the high-end SUV, saying it will take all perspectives on the matter into account before a decision is made.

“Challenges in restructuring the Brussels site include its particular layout and the fact it is very close to the city centre, resulting in higher production costs compared to other plants and prompting the automaker to consider ending production of the Q8 e-tron ahead of schedule,” the German manufacturer said in a statement.

“This announcement triggers the launch of the information and consultation process where the company management will discuss solutions for the employees and the site together with the responsible social partners and examine alternatives in detail.”