Mercedes-Benz freezes new investments in German plants

Mercedes-Benz has frozen new investment in production in Germany and allowed the closure of two plants amid disagreements with workers' representatives over cost cuts. This writes Bild, citing the words of a member of the Board of HR Britta Seeger from an interview in the internal network of the company.

Reuters also announced the suspension of investments, citing an appeal to employees, which the Agency saw.

The management of the concern explained the decision by the high cost of production and the lack of agreement with the production council and the trade union IG Metall. According to Seeger, the company will have to take a closer look at what businesses it can afford in Germany.

“We all want to avoid plant closures at all costs. However, now, unfortunately, we will have to consider this option more substantively, she said.

According to Bild, the board member in charge of production, Michael Schebe, had previously warned of the possible closure of the two plants if costs could not be cut. We are talking about one assembly plant and one enterprise for the production of components.

According to Tagesschau, Schiebe said that the cost of an hour of production labor in Germany in some cases up to five times higher than at sites in Eastern Europe. If a cost-cutting agreement fails, the new models will be produced exclusively abroad, he warned.

Management proposes to increase working hours without a corresponding increase in pay, as well as review additional payments, including employee participation in profits, holiday and Christmas bonuses. The transition from a 35-hour to a 40-hour work week is being discussed. For the production board and IG Metall, giving up the 35-hour week remains a red line. By increasing working hours and other measures, the company expected to cut staff costs in Germany by a maximum of €800 million. It could also close two factories in Germany if it fails to cut labor costs.

According to Mercedes-Benz, in the third quarter of 2026, the adjusted operating profit of the passenger division decreased from €1.139 billion to €560 million. Sales of cars decreased by 8%, to 407.2 thousand. Over the nine months, the division’s investment in fixed assets and research and development combined decreased by 11%.

Chief Executive Officer Ola Kellenius attributed the deterioration in performance, in particular, to increased competition in China. "The consistent cost discipline and strong contribution of Mercedes-Benz Vans and Mercedes-Benz Financial Services help us withstand these headwinds, while our strong balance sheet allows us to continue to invest in our future," he said.

The Mercedes-Benz brand appeared in Germany in 1926 after the merger of Benz & Cie. and Daimler-Motoren-Gesellschaft in Daimler-Benz AG. Its history dates back to the creation of the automobile by Karl Benz in 1886. The current Mercedes-Benz Group is headquartered in Stuttgart, Germany.

The main plants for the production of passenger cars are located in Germany, Hungary, the United States, China and South Africa. Chinese production is organized through a joint venture with BAIC Motor. In total, the production network of passenger cars, vans and components has about 30 production sites on four continents.

The group’s portfolio includes Mercedes-Benz, Mercedes-AMG and Mercedes-Maybach, as well as Mercedes-Benz Bank and Mercedes-Benz Financial Services. The main business areas are the production of passenger cars and vans, financing and leasing.

Other German automakers are also expanding savings programs. In October, Volkswagen announced plans to cut another 12,000 jobs by 2030, explaining the need for additional measures due to the deteriorating economic situation.