Mercedes-Benz halts German investment, weighs plant closures

Mercedes-Benz said Thursday it will halt all further investment in German sites and examine which plants it may have to close if it cannot change its cost structure.

Board member Michael Schiebe said in an interview posted on the company's intranet and sent to AFP that the executive board had decided to stop further investments in German sites. He said management could not see a way forward on a deal with unions despite intensive talks.

Schiebe said the company would carefully examine which German sites it would have to close if it cannot achieve a change in its cost structure. He added that management still hoped for a breakthrough and wanted future generations of vehicles to be built at German locations, but said there was a possibility that new products would be made only abroad.

The announcement comes during wage negotiations with the IG Metall union, which is demanding a five percent pay rise. Board member Britta Seeger called the demand “totally excessive” in the same document, saying it would further increase labour costs in Germany.

Mercedes-Benz wants a productivity drive that includes increasing working hours without extra pay, but no agreement with unions has been reached.

Auto sector analyst Ferdinand Dudenhoeffer said the announcement showed that Germany's car industry is in “its biggest crisis since its inception”. He said Mercedes-Benz had been stressing for months that the situation at its German sites was difficult.

Last month, Mercedes-Benz cut its profit outlook to 5.8 billion euros, or $6.5 billion, roughly level with 2025, after previously forecasting an increase of at least 15 percent. BMW and Volkswagen have also cut guidance for the year amid sluggish demand and competition from Chinese rivals including BYD and Xiaomi. Volkswagen plans to have cut 120,000 jobs globally by the end of the decade.