Mercedes-Benz Halts German Investment and Does Not Rule Out Factory Closures

what happened

Mercedes-Benz has frozen all new investment at its German sites and is now seriously considering closing some factories. Chief Production Officer Michael Schiebe said the management board reached the decision jointly, and staff were informed in an internal interview published on November 12, 2026, according to Reuters. Board member Britta Seeger acknowledged that the company must now examine in detail which German facilities it can afford to keep.

Several pressures sit behind the move. Sales in China fell 31% year on year in the third quarter of 2026 and 29% over the first nine months. The full-year margin forecast for passenger cars was cut to 2–3% from 3–5%. Adjusted EBIT at the passenger car division dropped 50.8% in the quarter, and US tariffs have cost the company roughly 1 billion euro in profit, according to its own estimate.

Management's main argument is labour cost. Schiebe said an hour of production labour in Germany can cost up to five times more than at some facilities in Eastern Europe. Handelsblatt, citing an internal company presentation, reported that labour costs at Kecskemét, the group's largest plant in Europe, are 75% lower than the average across its German factories. Talks with the works council and IG Metall on raising the working week from 35 to 40 hours without extra pay have not produced an agreement, and the target is annual savings of about 800 million euro.

why it matters

The investment freeze looks like pressure on the union, since future spending is effectively tied to lower labour costs. For the market it signals that the margins of a premium carmaker are under strain from several directions at once: China, tariffs and the cost of electrification. For the shares it is a risk factor, but no final decision on specific plants has been made, so the outcome of talks with the union will be the key reference point.

market impact

Mercedes-Benz shares: thin margins and risk to German plants weigh on the stock

• ▼Mercedes-Benz shares pressure down — thin margins and the risk of German plant closures lower earnings expectations

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