Mercedes-Benz halts investment in German plants, mulls closing factories - report

Mercedes-Benz is seemingly following in the footsteps of compatriot Volkswagen, and is contemplating the previously unthinkable: shutting down plants in its homeland.

In an interview posted on the company's intranet, and seen by AFP, Michael Schiebe, the board member in charge of production, quality and supply chain management, told employees "the executive board has jointly decided to halt all further investments in German sites" as the automaker continues to negotiate with unions.

Mr Schiebe said the management team can't see a path to a successful deal "despite numerous intensive discussions", and claimed the company is "now forced to carefully examine which German sites we would have to close if we cannot achieve a change in the cost structure".

The IG Metall union is reportedly asking for a five per cent pay increase. Britta Seeger, the company's labour director, described the union's ask as "totally excessive" as it would "drive up labour costs, already high in Germany, when they are already far too high in international comparison".

Instead, Mercedes-Benz is proposing a "productivity offensive" where German plant employees work longer hours for no extra pay.

The automaker currently operates at least eight factories in Germany: Affalterbach (AMG engines); Bremen (C-Class, CLE, GLC, GLC EV, EQE, SL); Düsseldorf (Sprinter/eSprinter); Hamburg (car components); Rastatt (A-Class, CLA, GLA); Sindelfingen (GLC, E-Class, S-Class, EQS, AMG GT); Untertürkheim (transmissions, batteries, motors); and Berlin (drivetrain parts).

Like other automakers, Mercedes-Benz is facing intense competition from Chinese brands, slower-than-expected take up of electric vehicles (EVs), and the cost of extra tariffs in the US. On top of this, sales in China, the company's largest single market, are falling. In 2025, sales in China fell 19 per cent compared to the year before.

Last month, Mercedes-Benz revised its 2026 forecast, saying it now expects to make a profit of €5.8 billion (A$9.4bn). Although that's roughly even with last year's profit, the company initially predicted a 15 per cent increase.

BMW and Volkswagen have also cut their profit forecasts. Volkswagen is seemingly facing the stiffest headwinds, wth the automaker planning to close four German factories and let go of 100,000 workers by the early 2030s.

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