Mercedes-Benz announced on Thursday that it was suspending further investment at its German sites for the time being.
“The board of directors has decided by mutual agreement to suspend any further investment in German sites,” Mercedes board member Michael Schiebe said in a note published on the company’s intranet and seen by the AFP news agency.
The company is also considering plant closures, the memo added.
The announcement comes as the German luxury carmaker faces increasing pressure from the works council and the IG Metall union.
What else did Mercedes-Benz say?
Mercedes-Benz is “obligated to examine, in a concrete and detailed manner, which sites in Germany we can still afford to maintain”, said Britta Seeger, member of the management board, in an interview published on the company intranet.
“We all want to avoid factory closures at all costs,” she added. “Unfortunately, we now have to pursue this option in a more concrete way.”
Shiebe, the company’s production director, said current cost structures meant it was not possible to invest in Germany.
Labor costs in Germany are sometimes five times higher than in factories in Eastern Europe, where administrative costs are also much cheaper.
Schiebe recently announced that two factories in Germany would have to close if costs did not fall.
Why did Mercedes-Benz struggle?
The automaker, one of Germany’s largest and best-known brands, has struggled with declining sales and profits in recent years.
Demand from China, the company’s largest market, which historically accounts for about a third of Mercedes’ passenger car sales, has weakened significantly, particularly for luxury foreign brands. Mercedes’ Chinese sales fell by around 19% in 2025.
The German automaker has invested heavily in electric vehicles, but demand for electric vehicles in Europe and North America has been slower than many manufacturers expected. At the same time, Mercedes also faces growing competition from cheaper electric vehicles imported from China.
Rising U.S. tariffs under President Donald Trump have also cut into profits. Mercedes said tariffs alone cost it around 1 billion euros in profits last year.
Several other major German automakers, including Volkswagen, BMW, Audi and Porsche, as well as other European manufacturers, are facing similar problems.
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