Mercedes-Benz said on November 12 that it will freeze all further investment in its German production facilities and consider closing plants after cost negotiations with employee representatives reached an impasse. According to the Financial Times, management unanimously decided to suspend investment in Germany and to assess which German plants can operate profitably in the long term.
Production chief Michael Schiebe said the current cost structure no longer allows the company to invest in Germany, with hourly production costs at some German sites five times those of its eastern European plants, and that two German plants could be closed if costs do not come down: a vehicle assembly plant and a powertrain plant. Human resources chief Britta Seeger said "we all want to avoid plant closures at all costs, but unfortunately we now have to seriously consider this option". The union is seeking a 5% pay rise, which the company called "far too high".
The decision follows a cut to the company's full-year outlook. At the end of October, after third-quarter deliveries in China fell by nearly a third, Mercedes lowered its 2026 operating margin forecast for its car division. Germany's auto industry is in a deep retrenchment: Volkswagen has considered cutting 100,000 jobs and closing four German plants, and supplier Schaeffler has announced 3,460 job cuts and the closure of five European plants, four of them in Germany. European vehicle output is currently about 12 million units a year, down from 15 million in 2017.