German automotive group Mercedes-Benz has decided to suspend further investment in its production facilities in Germany and has begun a detailed analysis of the possibility of closing certain plants due to high production costs and the lack of agreements with trade unions on reducing them, Reuters reported on November 12, citing an internal message from the company’s management to employees.
The management board’s decision was made after several months of unsuccessful negotiations with the works council and the IG Metall trade union on increasing labor productivity and reducing personnel costs.
Michael Schiebe, the Mercedes-Benz management board member responsible for production, said that management had jointly decided to halt all further investments in German facilities until agreements on cost reductions are reached.
According to him, the cost of one working hour at some of the group’s plants in Germany can be five times higher than at production facilities in Eastern European countries.
Mercedes-Benz management warned that, in the absence of agreements to improve competitiveness, production of new car models could be located exclusively outside Germany.
Britta Seeger, a member of the company’s management board, noted that the group seeks to avoid plant closures but, due to the lack of progress in negotiations, is forced to examine this possibility in greater detail.
Schiebe had previously warned that if the current level of costs persists, two German facilities, including an assembly plant and a powertrain production facility, could face closure.
The specific facilities that could be closed have not yet been named, and no final decisions have been made regarding the termination of their operations.
Mercedes-Benz has around 12 production facilities in Germany. Its main passenger car assembly plants are located in Sindelfingen, Rastatt, and Bremen, while engine and component production is concentrated in Stuttgart and other cities. The main point of disagreement between management and employees remains working hours and the wage structure. The group proposes increasing the working week from 35 to 40 hours without a corresponding increase in wages, as well as revising the system of bonuses, additional payments, and compensation.
The IG Metall trade union opposes the deterioration of working conditions and is demanding a 5% wage increase as part of the current industry-wide negotiations.
According to Handelsblatt, Mercedes-Benz management expects to save approximately EUR 800 million annually by reducing personnel costs.
Negotiations on cost reductions are taking place against the backdrop of deteriorating financial performance in Mercedes-Benz’s passenger car business.
According to the group’s financial statements published on October 28, sales of Mercedes-Benz Cars vehicles in the third quarter of 2026 declined by 7.8% compared with the same period of the previous year, to 407,200 units.
The division’s revenue fell by 5.8% to EUR 22.37 billion, while adjusted operating profit (EBIT) dropped by 50.8% to EUR 560 million, compared with EUR 1.14 billion a year earlier.
The adjusted return on sales decreased from 4.8% to 2.5%.
At the same time, the financial results of Mercedes-Benz Group as a whole were better thanks to the performance of its commercial vehicle and financial services divisions.
The group’s total operating profit in the third quarter amounted to EUR 1.77 billion, compared with EUR 750 million a year earlier, while net profit increased to EUR 1.52 billion.
During the first nine months of 2026, investments in fixed assets and research and development expenditures at the Mercedes-Benz Cars division decreased by a combined 11%.
The company also announced the resumption, starting in December 2026, of a voluntary redundancy program for employees of administrative and other indirect departments in Germany.
Mercedes-Benz explains the need for restructuring by intensifying competition from Chinese automakers, declining demand in certain markets, high production costs, and the impact of tariff restrictions.
The difficult situation at Mercedes-Benz is unfolding against the backdrop of restructuring at other major automotive groups and component manufacturers in Germany.
In particular, German automotive components manufacturer Schaeffler announced on November 3 plans to cut 3,460 jobs in Europe, including approximately 2,660 in Germany, and close five production facilities, four of which are located in Germany.
The company expects the restructuring to improve its annual financial result by approximately EUR 300 million starting in 2030.
Meanwhile, Volkswagen is implementing a cost-reduction and production restructuring program in response to intensifying international competition.
According to a study by consulting firm Roland Berger published on October 7, 2026, the German automotive industry could lose at least 200,000 jobs by 2030.
Analysts estimate that employment in the industry, including carmakers and component manufacturers, could fall from approximately 692,000 people in 2025 to 490,000 in 2030.
The researchers note that the average capacity utilization rate of German automotive plants in 2025 was around 60%, whereas profitable operations usually require a rate of at least 75–80%.
Mercedes-Benz Group AG is one of the world’s largest manufacturers of premium-segment automobiles, headquartered in Stuttgart. The group includes the Mercedes-Benz Cars, Mercedes-Benz Vans, and Mercedes-Benz Financial Services divisions. The company produces passenger cars, electric vehicles, and light commercial vehicles, and also provides financial and leasing services.
