Daimler AG Chief Executive Officer Ola Kallenius said the maker of Mercedes-Benz cars and the industry as a whole face painful cutbacks to overcome the economic fallout of the Covid-19 pandemic.

The virus outbreak will force manufacturers to do more significant restructuring than they had planned before the crisis erupted, Kallenius said Wednesday during a webcast hosted by Germany’s largest labor union, IG Metall.

The “significantly harsher reality” for the industry following Covid-19 will necessitate “drastic” salary cuts, with Daimler executives facing bigger reductions than rank-and-file workers, he said. The adjustments are necessary to protect Daimler’s financial condition and safeguard investments in future technologies, according to the CEO.

The virus outbreak shuttered factories and showrooms across the globe, exacerbating Daimler’s struggle to execute a deep restructuring announced last year. Kallenius indicated in April that the planned measures might not be enough in light of the dramatic market contraction. The company and its German peers Volkswagen AG and BMW AG are bracing for second-quarter losses.

While the German auto industry’s prospects are slowly starting to improve, with demand recovering in markets including China and France, companies still rate the current situation as “very pessimistic,” Munich-based Ifo Institut said Thursday in a statement. The group’s employment indicator fell four points to minus 54.4 points in June -- worse than during the 2009 financial crisis.

Daimler’s restructuring plan, issued in November, called for cutting its workforce by more than 10,000 to slash 1.4 billion euros ($1.6 billion) off personnel spending by 2022. Another 10,000 jobs could be axed through 2025, trade magazine Automobilwoche reported last month, citing unidentified company sources. Daimler, which had about 299,000 employees at the end of 2019, called the report “speculation.”

Daimler shares rose as much as 2.3% in early trading in Frankfurt on Thursday.

Kallenius must brace for critical questions from investors at Daimler’s annual general meeting next week, his first one as CEO after succeeding veteran leader Dieter Zetsche last year. The stock is down 26% this year, giving Daimler a market value of about 39 billion euros -- less than a quarter of Tesla Inc.