FRANKFURT, Germany, Feb 20, 2025 (BSS/AFP) - Mercedes-Benz said Thursday it planned hefty cost cuts after its 2024 profits plunged by almost a third amid a slump in China and weak electric car sales, as Germany's auto sector reels.

The German auto giant's net profit fell 28 percent from the previous year to 10.4 billion euros ($10.8 billion), while revenues also slid about four percent to 145.6 billion euros.

The group announced plans to slash production costs by a tenth by 2027 and also gave a bleak outlook for this year, saying it expected lower sales and leaner profit margins.

"To ensure the company's future competitiveness in an increasingly uncertain world, we are taking steps to make the company leaner, faster and stronger," CEO Ola Kallenius said in a statement.

It was the latest bad news from one of the country's car titans, which are reeling from a stuttering shift to electric vehicles, fierce competition in China from local rivals and weakening demand elsewhere.

The fading fortunes of the auto sector have become symbolic of a broader malaise affecting Europe's struggling top economy -- a key battleground ahead of a general election at the weekend.

The Stuttgart-based group, which employs 166,000 people worldwide, did not immediately give details on the cost-cutting drive, such as on potential job losses.

- Gloomy outlook -

In China, Mercedes's biggest single market, sales dropped seven percent in 2024.

German manufacturers all invested heavily in China in recent decades and came to rely on the world's biggest auto market for a hefty chunk of their sales and profits.

But the picture has changed dramatically, with successful Chinese rivals, such as electric carmaker BYD, rapidly eroding foreign manufacturers' market share, as they offer technology-packed models that appeal to local consumers.

Car sales have also been lacklustre in general in the world's second-biggest economy as it battles a slowdown.

Overall Mercedes's sales fell four percent last year from the previous year, hit by a drop of 23-percent in sales of electric vehicles.

It was the latest evidence that the transition to EVs is stalling, a slowdown that is weighing heavily on carmakers across Europe.

On the outlook for 2025, the manufacturer said it expected slightly lower revenues than last year "in a market environment that remains challenging" as vehicle sales slow further.

It also said it expected profit margins of between six and eight percent for this year, after a figure of above eight percent in 2024.

Despite the bleak results, the carmaker sought to strike an upbeat note, saying it expected sales to pick up in the coming years due to the release of new and refreshed models.

There has been a steady stream of bad news from Germany's auto sector in recent times.

In December, Europe's biggest carmaker Volkswagen announced plans to cut 35,000 jobs in Germany by 2030 although it held off from closing factories on home turf for the first time, as had been feared.

BMW has also seen its profits slump due to worsening sales in China while a string of auto suppliers, such as Continental and Bosch, have slashed jobs.