Mercedes-Benz Halts Investments in Germany, Considers Plant Closures Amid Industry Crisis

Mercedes-Benz announced on Thursday that it will stop all investments in Germany and is considering closing some of its plants. This decision highlights the struggles of the automotive industry in Germany, which is facing increasing competition from Chinese companies and rising costs.

Michael Schiebe, a member of the company’s executive board, stated that management has been in discussions with staff representatives to find ways to cut costs. However, he noted that these talks have not been fruitful, leading to the decision to halt future investments.

Schiebe mentioned that if the company cannot reach a new agreement with labor unions, it will have to evaluate which German sites may need to close. Despite this, he expressed hope for a breakthrough in negotiations, emphasizing the desire to keep producing future vehicle models in Germany.

The IG Metall union is currently pushing for a five percent pay increase, which the company views as excessive given the already high labor costs in Germany. Another board member, Britta Seeger, argued that such an increase would further raise costs and complicate the company’s financial situation.

Mercedes-Benz is also looking to implement a “productivity offensive” to lower costs, which may include increasing working hours without additional pay. However, there has been no agreement with the unions on this proposal.

Industry analyst Ferdinand Dudenhoeffer commented that the situation reflects the biggest crisis the German automotive sector has faced. He warned that without significant changes to the cost structure, the industry may struggle to survive.

Last month, Mercedes-Benz lowered its profit expectations for the year to about 5.8 billion euros, a significant drop from earlier forecasts. Other major car manufacturers like BMW and Volkswagen have also reduced their profit outlooks due to similar challenges.