Mercedes-Benz freezes German investments and considers closing two production facilities

Mercedes-Benz management announced on November 12, 2026, via an internal portal that all further investments in German production facilities are frozen. The company's board of directors reached a unanimous decision to suspend these investments as part of a strategy to address high costs and intense competition. As part of these measures, Mercedes-Benz is considering the closure of two German factories. Britta Seeger, the Member of the Board of Management responsible for Human Resources at Mercedes-Benz, stated, "The company must specifically and in detail examine which German production sites can remain operational."

Cost pressures and productivity measures

The decision follows significant economic pressures facing the German automotive sector. Mercedes-Benz is aiming to achieve annual savings of approximately 800 million euros within Germany. To help increase productivity, management is requesting that employees work a minimum of 38 hours per week, an increase from the current 35-hour work week. Additionally, the company is considering a voluntary redundancy program that would begin in December 2026.

Labor costs remain a significant factor in the company's decision-making process. In certain instances, labor costs in Germany are reported to be up to five times higher than those at plants located in Eastern Europe. These financial pressures coincide with broader industry trends. Mercedes-Benz was the third major German automaker to lower its annual earnings guidance in October 2026, following similar moves by BMW and Volkswagen. While the company reported a net profit of approximately 1.09 billion euros in the second quarter of 2026, the total profit for the full year of 2026 is expected to be 5.8 billion euros, which matches the 2025 figures.

Industry context and competition

The automotive industry in Germany is facing significant challenges. Automotive industry analyst Ferdinand Dudenhoeffel noted, "The German automotive industry is facing its most serious crisis since its inception." The sector is currently experiencing notable cost pressures and declines in sales. Furthermore, Mercedes-Benz is facing pressure from competition in China, particularly regarding the market for electric and hybrid vehicles.

The situation is complicated by ongoing negotiations regarding worker compensation. The trade union IG Metall is currently requesting a 5% wage increase. As the company navigates these economic shifts, the manufacturing landscape in Germany continues to undergo scrutiny due to the high cost of production compared to international markets.

Glossary

• IG Metall — IG Metall is a trade union. It is involved in negotiations regarding worker compensation.