As the German automobile industry recession deepens, Mercedes-Benz (hereinafter referred to as Benz), following Volkswagen Group, has also formalized discussions on closing its plants in Germany.
According to the business magazine Handelsblatt, Mercedes-Benz posted a message in the form of a management interview on the company bulletin board on the 12th (local time), announcing that it would stop all investments in Germany and consider closing its factories.
“Despite intensive discussions (on cost reduction), there is currently no sign of a solution,” said Brita Seeger, director of human resources. “Therefore, we have no choice but to discuss in detail what kind of business we can attract in Germany.”
“The board of directors has decided to suspend all further investments in our German operations,” said Michael Siebe, production director. He added that labor costs in Germany are up to five times higher than in Eastern Europe, and that “all future models will be produced abroad.”
Mercedes-Benz CEO Ola Kelenius also argued at a conference hosted by a media company that day that Germany's labor costs should be lowered to at least the US level, saying, "It is possible to lower it from 100 to 80."
Mercedes-Benz management said in September that "its clear goal is to maintain all of its plants in Germany," but that if it fails to agree on cost reductions, it will have to close one assembly plant and one parts plant each in Germany.
Mercedes-Benz operates three finished vehicle assembly plants and seven parts production plants, including engines and batteries, in Germany.
Volkswagen Group, Europe's largest automaker, has already decided to stop production at two of its 10 plants in Germany and is discussing ways to utilize the other four plants.
Mercedes-Benz is experiencing management difficulties in China, its largest market, as the wealthy increasingly ignore German luxury cars and the automobile tariffs imposed by the U.S. Donald Trump administration.
Management plans to reduce costs by 5 billion euros by 2027 and has been pushing to reduce labor costs since last year, but has faced opposition from unions.
Meanwhile, IG Metal (Metal Industry Union), Germany's largest industrial union with over 2 million members, including those in the automobile industry, decided to go on a 24-hour strike on this day, claiming that management was insincere in negotiating a collective agreement.
IG Metal is requesting a 5% wage increase. However, the management community proposed a one-time additional payment of 1% of wages next year and a 1.3% increase in wages in 2028.
