Mercedes-Benz Warns 2 German Plants Could Close Without Cost Cuts

Key Facts

Michael Schiebe, the Mercedes-Benz management-board member responsible for production, quality and supply-chain management, warned employees at a Sindelfingen meeting that failure to agree on German cost reductions would force the company to close 2 sites: 1 vehicle-assembly plant and 1 powertrain plant. A company spokesperson confirmed the substance of the remarks to dpa, while Schiebe said the objective remained to preserve all German sites.

Mercedes-Benz says structural costs in Germany, including labor, are internationally uncompetitive. Talks with employee representatives include extending the working week from 35 to 38 hours without a corresponding pay increase, but negotiations remain under way and no agreement has been announced.

On February 20, 2025, the company targeted a 10% reduction in production costs by 2027 and said at the time that it had no plans to close German plants. It also estimated production-factor costs at Hungary's Kecskemét plant were roughly 70% below Germany's. Longer hours for unchanged monthly pay reduce labor cost per hour, but the effect on vehicle cost also depends on plant utilization and actual output; the closure warning therefore marks a tougher stance than the previous plan.

The economic backdrop is mixed rather than uniformly negative. Euro-area industrial production fell 0.1% month on month in July, not August.

Mercedes-Benz's MBGAF shares closed at $50.35 on September 21, 2026, after trading between $50.25 and $50.40. For investors, an agreement that lowers labor cost per unit could support margins, while plant closures could introduce restructuring charges, execution risk and disruption as production capacity is transferred.