German car industry job losses hit 40,000 as Mercedes-Benz owner wields the axe

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Daimler plans to cut 10,000 jobs to help fund the transition to electric cars

The owner of Mercedes-Benz is to axe at least 10,000 workers worldwide, taking the number of jobs losses by German carmakers to almost 40,000 this year as the industry reels from a sales slump.

The company said the cuts are part of a huge cost-saving drive to help finance development of  electric cars. They follow two profit warnings this year.

Wilfried Porth, personnel chief, said: "The total number worldwide will be in the five-digits."

The company announced plans to ditch more than 1,000 management roles a fortnight ago.

Daimler, which also builds trucks and buses, said it wants to save €1.4bn (£1.2bn) in staff costs as it invests billions in environmentally friendly cars.

It is just the latest blow to Germany's vehicle industry, which employs about 800,000 people. They build almost one in every three of the 16m cars rolling of European production lines annually. 

This week VW Group-owned Audi announced it would shed almost 10,000 people - about 10pc of its global workforce. In the spring VW itself up to 7,000 jobs would go with the savings reinvested in electric vehicles. 

US car firm Ford plans to axe 5,000 German positions as part of a wider restructuring, and parts suppliers Continental and Bosch aim to cut more than 7,000 roles between them.

German media have reported that BMW could eliminate 6,000 roles as part of a plan to save €12bn, which could be unveiled as soon as December. 

Announcing the job losses, Daimler said the car industry is "in the middle of the biggest transformation in its history. The development towards CO2-neutral mobility requires large investments."

Carmakers are racing to produce less polluting cars to meet tough new emission rules being introduced in the EU, China and the US - the world's three biggest markets.

If they fail to lower their "fleet average" emission levels, they face heavy fines that will start to be imposed next year. The threat is driving expensive investments in zero-emissions electric cars and plug-in hybrids.

Moody’s has predicted major manufacturers could face worldwide fines totalling £10bn unless they sell more environmentally friendly cars. More polluting models could even be withdrawn to help hit targets. 

Pressure on carmakers is being intensifed by a global economic slowdown, hitting sales in China's giant car market, and the prospect of a trade war which could see tariffs imposed - pushing up costs not only to sell finished vehicles abroad, but also for the imported parts required to build them.  

The growth of electric vehicles is putting further strain on carmakers worldwide, as they are less mechanically complicated than traditional internal combustion engines, meaning less labour is required to build them. 

German automotive expert Ferdinand Dudenhoeffer has forecast that Germany's car industry will cut 250,000 existing jobs over coming next decade but create 125,000 new roles as battery technology and other new systems such as autonomous driving grow.

Daimler, like VW Group, has said job losses will be achieved through natural turn over, early retirement schemes and severance packages, although there are concerns the sheer size of the cuts could mean some compulsory redundancies. 

The Daimler job losses came as rival BMW announced a tie-up with China's Great Wall Motor to build a €650m plant in the city of Zhangjigang.

The joint venture will create a plant capable of turning out 160,000 cars per year, where BMW said it will produce future electric versions of its Mini.

It raises questions about the long-term future of the Mini plant in Oxford, which in July started building the electric version of the iconic car.

Oxford was selected to build the electric Mini two years ago, seemingly protecting the future of the plant's 4,500 staff, who produce almost two thirds of the 360,000 Minis sold annually.

An electric Mini at BMW's Oxford plant

BMW said the Oxford plant will remain the heart of Mini manufacturing. It added: "The new joint venture will provide additional capacity and flexibility."

However, the prospect of Britain blowing out of the EU without a free trade deal which would likely mean 10pc tariffs on exports of UK-built cars under World Trade Organisation rules could make the Oxford factory uneconomic.

BMW already produces Minis at a plant in the Netherlands, and a new plant capable of building the car in low-cost China could  meaning work being shifted away from the UK in the event of a hard Brexit.

Professor David Bailey, a car industry expert at Birmingham University, said: "A plant in China has been on the cards for a while as the country is such a huge market.

"While it will focus on electric Minis it could displace exports from Oxford so may well have an impact on output and employment in the medium term.

"With production in Oxford, the Netherlands and now China, this gives BMW more scope to shift production around. While BMW claims Oxford remains the ‘heart’ of the Mini, in fact this is a transnational operation with a union flag on the roof."