Mercedes stops investments in Germany - and examines closures

Auto industry Mercedes stops investments in German locations As of: November 12, 2026 • 7:44 p.m

There is no solution in sight in the negotiations to cut costs at Mercedes. Now the group is increasing the pressure: the board is putting all investments in German locations on hold - and wants to examine plant closures.

At the car manufacturer Mercedes, negotiations over costs with the works council and IG Metall are at a standstill. Against this background, the group's board of directors has now announced that it will examine the option of plant closures. In addition, it was decided to “stop all further investments in the German locations,” explained production director Michael Schiebe in an interview published on the group intranet.

Despite numerous intensive discussions, there is currently no "solution corridor" identified and no investment in Germany with today's cost structures, said Schiebe, justifying the decision.

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With the announcements, the company is increasing the pressure on employees. The company now needs a decision in the negotiations with the works council about concessions for the workforce, explained Human Resources Director Britta Seeger. "This is currently not foreseeable. We are therefore now forced to examine specifically and in detail which locations we can still afford in Germany." Closures should be avoided “at all costs,” but this option must now “unfortunately be pursued more specifically.”

Production director Schiebe emphasized in the interview: The cost of an hour of work in production in Germany is sometimes up to five times higher than at locations in Eastern Europe. New models would only be manufactured abroad if no agreement was reached.

Seeger also referred to the ongoing collective bargaining in the metal and electrical industries. IG Metall is demanding five percent more money. "Such an increase would further increase the already high labor costs in Germany, even though they are already far too high compared to other countries."

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In total, Mercedes operates a dozen production sites in Germany. The car manufacturer is currently in discussions about the company's so-called "productivity offensive", which is intended to save costs.

Because of the slump in profits in the car business, the board is demanding that employees work longer without wage compensation. The conversation was 40 instead of 35 hours. This is a red line for the works council and IG Metall, as the 35-hour week is a central achievement for the union.

The conditions under which the reduction in working hours was agreed no longer exist, argued Seeger. By working more hours, productivity can increase quickly without affecting employee pay. However, management also wants special payments, voluntary benefits such as profit sharing and collective bargaining components such as vacation and Christmas bonuses.

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He understands that “the measures discussed demand a lot from our employees,” said Schiebe. But action must now be taken: “We are in an extremely challenging environment, characterized by tariffs, price pressure, weaker demand and intense competition, especially from China.”

Seeger explained that the board would also make a financial waiver. Managers have not received an increase in two pay rounds.

Mercedes has had to struggle with declining sales and slumping profits in recent years. A few weeks ago, Schiebe discussed closing two plants in Germany if costs were not reduced. A German bodywork and a German powertrain plant would then be affected. Components for cars are manufactured in powertrain factories.

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