Mercedes-Benz has halted all new investments in Germany and is weighing factory closures after four months of talks with unions over labour costs failed to produce an agreement.
The Stuttgart-based carmaker announced the decision on Thursday in an interview posted on its internal communications system, according to POLITICO and AFP. The board said it would "stop all further investments at our German sites." It added that future manufacturing would take place outside Germany if no deal is reached with IG Metall, the German trade union. The dispute centres on a demand for 40-hour weeks instead of the current 35 for the same pay.
No specific plants have been named for closure. Production chief Michael Schiebe has warned that two facilities could close: one assembly plant and one powertrain plant. Mercedes operates assembly plants in Sindelfingen, Rastatt and Bremen. Its powertrain facilities are in Stuttgart-Untertürkheim, Affalterbach, Berlin, Hamburg, Kamenz, Kölleda and Arnstadt. The company employed about 108,000 people in Germany at the end of 2025. Sindelfingen alone has more than 31,500 workers. Bremen has roughly 10,500. Rastatt has about 7,000.
Schiebe said one hour of production in Germany can cost up to five times as much as in Eastern Europe. Chief executive Ola Källenius has presented a cost index. Germany scores 100, the United States 80, Hungary 30, Romania 20 and China 10 to 20. Moving to 40 hours at the same monthly pay would mean 14.3 percent more work and a 12.5 percent lower hourly wage. The company is seeking savings of up to €800 million.
Human resources director Britta Seeger told employees that no quick agreement is in sight. She said the company must "concretely and in detail examine which sites we can still afford in Germany." She added: "We all want to avoid plant closures at any price. But we must now unfortunately pursue this option more concretely." Schiebe said that despite intensive talks, no "solution corridor" had emerged.
IG Metall and the works council rejected the threat. They said they were "ready to find solutions" and demanded talks about the investment halt. IG Metall considers the 35-hour week one of the most important achievements of the labour movement. Workers protested in July and September after supervisory board chairman Martin Brudermüller raised the idea of returning to 40 hours.
Mercedes faces falling sales and profits. Deliveries in China, its largest market, fell 31 percent in the third quarter. US tariffs cost the company about €1 billion in profit in 2025. The company had already launched a savings programme in February 2025 and extended employment security in Germany until 2034.
Automotive expert Ferdinand Dudenhöffer said the situation must be taken "extremely seriously." He said Germany was "the worst country in which to produce vehicles." He accused IG Metall of fighting for privileges that ultimately cost workers their jobs.
