Daimler Truck Won't Rule Out China Exit as Global Challenges Mount

The Perfect Storm: Daimler Truck's Global Crisis Unfolds

Have you ever wondered what happens when the world's largest truck manufacturer faces challenges on multiple fronts simultaneously? Daimler Truck, the German automotive giant behind Mercedes-Benz trucks, is currently navigating what CEO Karin Rådström describes as a crazy global downcycle that's forcing the company to reconsider its entire strategic footprint.

In a candid interview with the Financial Times on July 21, 2025, Rådström made headlines by stating that the company would not rule out an exit from manufacturing in China. When asked about the company's future in the world's largest truck market, she responded with a telling phrase: basically we're looking at everything. This statement has sent shockwaves through the automotive industry, signaling that even established global players are being forced to make dramatic strategic pivots in today's challenging economic environment.

The context behind this potential withdrawal is complex and multifaceted. China's heavy truck market has experienced a dramatic contraction, falling from approximately one million units in 2021 to just 430,000 units in 2023, with diesel engine trucks accounting for only 250,000 units. This steep decline has directly impacted Daimler Truck, which began producing Mercedes-Benz Actros diesel engine trucks locally in China from 2022. The company had initially promised investors a decision on its China business future by the end of 2025, but mounting pressures are accelerating this timeline.

China Market Collapse: From Promise to Peril

The Chinese truck market, once heralded as the world's largest and most promising, has become a cautionary tale of rapid market shifts and challenging profitability dynamics. Despite its massive scale, Rådström acknowledged that while China remains the world's largest truck market, it's not easy to make money there, though she noted it's a market where technology development is moving fast.

The numbers tell a stark story of market contraction. Official statistics reveal that China's heavy truck market plummeted from around one million units in 2021 to just 430,000 units in 2023, representing a staggering 57% decline in just two years. Within this shrinking market, diesel engine trucks - Daimler's specialty - accounted for only 250,000 units, making profitability even more challenging.

This market decline has forced Daimler to reassess its Chinese operations fundamentally. The company's strategic retreat from China represents part of a broader global rebalancing effort, as detailed in recent investment analyses. Daimler's decision to consolidate its China and India operations under the Mercedes-Benz Trucks division reflects a pragmatic response to shifting dynamics in Asia. The 13% sales growth in the region during Q2 2025, following a 29% decline in 2024, underscores the market's volatility and unpredictability.

Industry observers note that Daimler's potential withdrawal wouldn't be a complete exit but rather a strategic pivot to balance localized efficiency with global supply chain security. The company wants to remain in China in some form to retain access to research and development and sourcing of materials, but may not need to keep a manufacturing footprint. This approach reflects the complex reality of modern global manufacturing, where companies must balance market access with operational efficiency and geopolitical risk management.

Trump Tariffs: The American Challenge

If China represents a challenging market with declining demand, the United States presents an entirely different set of obstacles centered around trade policy and tariff uncertainties. The impact of President Trump's tariff policies has created what industry analysts describe as unprecedented cost pressures that are fundamentally reshaping global truck manufacturing strategies.

Daimler Truck's North American operations have been particularly hard hit by these trade tensions. The company reported a 20% decline in second-quarter sales in North America, directly attributed to logistics companies postponing purchases due to tariff-related uncertainties. This decline is part of a broader pattern, with first-quarter sales dropping 16% in North America compared to the previous year.

The tariff impact extends beyond immediate sales figures to fundamental strategic considerations. Currently, Daimler benefits from USMCA (United States-Mexico-Canada Agreement) exceptions that allow the company to export trucks assembled in Mexico to the United States without tariffs. However, the Trump administration has initiated investigations into how imports of medium and heavy trucks affect national security, creating additional uncertainty about future trade arrangements.

The company has been forced to dramatically revise its outlook due to these pressures. In May 2025, Daimler lowered its annual sales expectations from 460,000-480,000 vehicles to 430,000-460,000 units, with industrial business revenue projected at €48-51 billion, down from the previous forecast of €52-54 billion. The uncertainty has also led to more conservative profit projections, with adjusted Group EBIT now expected to range from minus 5% to plus 5% year-on-year, compared to the previously anticipated 5% to 15% increase.

European Woes: The Home Market Struggles

While international markets present their own challenges, Daimler Truck's struggles in its European home market reveal deeper structural issues that go beyond external trade tensions. European demand has shown consistent weakness, with the company reporting an 18% decline in European sales during the first quarter of 2025.

The European truck market's challenges reflect broader economic uncertainties and a normalization period following the post-pandemic boom. European truckmakers faced significant headwinds in 2024 as sales declined following record-breaking performance in 2023, which was fueled by pent-up demand from the pandemic period. This normalization has hit Daimler particularly hard, as the company's Mercedes-Benz Trucks division saw the sharpest sales decline, prompting urgent restructuring actions.

The company's response to European market challenges has been comprehensive and dramatic. Daimler announced the Cost Down Europe program, targeting more than €1 billion in savings by 2030. This initiative includes significant workforce reductions, with plans to cut approximately 5,000 jobs in Germany over the next five years - representing about 14% of the company's German workforce.

The job cuts will primarily affect administrative functions, sales staff, and headquarters roles across five major facilities: Wörth, Gaggenau, Kassel, Mannheim, and Stuttgart. Administrative staff will see a 20% reduction between 2024 and 2030, while sales staff will face 15% cuts. These reductions are planned to be implemented through natural attrition, expanded early retirement options, and targeted severance packages, with the company committing to avoid mandatory layoffs until the end of 2034.

Financial Reality Check: Numbers Don't Lie

The financial impact of Daimler Truck's multi-front challenges becomes starkly apparent when examining the company's recent performance metrics and revised projections. The numbers paint a picture of a company grappling with simultaneous pressures across all major markets while attempting to maintain profitability and strategic flexibility.

For 2024, Daimler Truck reported a 15% drop in adjusted earnings before interest and taxes (EBIT) to €4.67 billion, citing lower demand and cost challenges primarily in the European market. The company also experienced a 12% decline in global unit sales, from 526,053 units in 2023 to 460,409 in 2024, alongside a year-on-year revenue drop of €1.2 billion to €54.1 billion.

The revision of 2025 forecasts illustrates the severity of current challenges. Originally, Daimler had projected industrial revenue of €52-54 billion and an operating profit increase of 5-15%. However, mounting pressures forced the company to lower expectations significantly: revenue is now forecast at €48-51 billion, and adjusted EBIT is expected to range from minus 5% to plus 5% of the previous year's result.

Despite these challenges, the company maintains confidence in certain segments. Trucks North America is still expected to achieve profitability between 11% and 13% for the full year, highlighting what the company calls the strong resilience of the North American business. The company has also set ambitious long-term targets, aiming for an adjusted return on sales of over 12% in its industrial business by 2030, up from 8.9% achieved in 2024.

Strategic Pivot: Adaptation in Crisis

Faced with unprecedented challenges across multiple markets, Daimler Truck is executing a comprehensive strategic transformation that goes far beyond simple cost-cutting measures. The company's approach represents a fundamental reimagining of its global footprint and operational priorities in response to what CEO Rådström characterizes as a period with almost no normal conditions since taking the top job in October 2024.

The strategic reorganization encompasses several key elements, starting with geographic rebalancing. The potential withdrawal from Chinese manufacturing represents part of a broader global rebalancing effort that prioritizes operational resilience over pure market access. This includes consolidating operations in Asia while maintaining research and development capabilities and supply chain relationships without necessarily maintaining manufacturing footprints.

Technology transition represents another crucial pillar of the strategic pivot. The company is accelerating its shift toward zero-emission vehicles while maintaining flexibility in investment approaches. Unlike some competitors, Daimler deliberately chose not to invest in its own gigafactory for battery cells or even a lithium mine, instead building on partnerships and making step-by-step investments. This approach is now providing the necessary flexibility to adjust strategies based on market conditions and regulatory changes.

The restructuring also emphasizes service business expansion and operational efficiency improvements. Daimler aims to increase service portfolio revenues from the current 30% toward 50% by 2030, while targeting organic revenue growth of 3-5% annually through 2030. The company is focusing on defense business growth, zero-emission vehicle expansion to over 25,000 unit sales in Europe by 2030, growth in India, and high-margin vocational trucks in North America.

Looking Ahead: Uncertain Future in a Fragmented World

As Daimler Truck navigates this complex landscape of challenges, the company's situation reflects broader trends reshaping the global automotive industry. The convergence of trade tensions, market volatility, technological transitions, and geopolitical fragmentation is forcing even the most established players to fundamentally reconsider their strategic approaches and operational models.

The timeline for key decisions remains compressed, with the company committed to determining its China business future by the end of 2025. This decision will likely serve as a bellwether for other Western manufacturers operating in China, particularly as geopolitical tensions continue to influence business considerations alongside pure market dynamics.

Industry analysts suggest that Daimler's challenges and responses may become a template for other global manufacturers facing similar pressures. The company's approach of maintaining strategic flexibility while making decisive cuts in underperforming areas could influence how other automotive giants handle the current period of uncertainty.

The broader implications extend beyond Daimler to the entire truck manufacturing ecosystem. The global medium and heavy truck market is expected to register a slight decrease of up to 10% in year-on-year deliveries for 2025, with sustained demand driven primarily by replacement needs and new sustainable truck model launches. This environment of modest demand coupled with significant operational challenges is likely to accelerate industry consolidation and strategic repositioning across multiple players.

For international observers, Daimler Truck's situation illustrates how quickly global business conditions can shift and how even industry leaders must remain agile in their strategic thinking. The company's willingness to consider dramatic changes, including potential manufacturing withdrawals from major markets, demonstrates the new reality of operating in an increasingly fragmented and uncertain global economy.