Mercedes-Benz warns German plants may close unless workers accept cost cuts

September 6, 2026 at 05:41 AM1 min

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Mercedes-Benz management has told German plant workers that production cuts and a possible plant closure are on the table unless staff agree to lower costs, including changes to vacation pay, Christmas bonuses, and the 35-hour work week. The warning comes as the company cites high German production costs and falling sales in China. A board member said Mercedes could build a new plant in another European country if costs do not fall substantially.

Key Facts

Mercedes-Benz management is demanding changes to vacation pay, Christmas bonuses, and the 35-hour work week at its German plants.
A Mercedes board member warned employees that the company could build a new plant in another European country if German production costs do not fall substantially.
The Mercedes plant in Kecskemét, Hungary, is being expanded to produce up to 400,000 vehicles per year.
Volkswagen has announced the largest job cuts in the history of the auto industry.

Cost-Cutting Demands

Mercedes-Benz management has told German plant workers that production cuts and a possible plant closure are on the table unless staff agree to lower costs. The company is demanding changes to vacation pay, Christmas bonuses, and the 35-hour work week. Mercedes argues that high production costs in Germany are reducing the competitiveness of its plants. Falling vehicle sales, especially in the Chinese market, are adding to the pressure.

Threat of Relocation

According to Wirtschaftswoche, a Mercedes board member warned employees that if German production costs do not fall substantially, the company could build a new plant in another European country. Works council representatives called the statements 'blackmail' and an 'extreme threat.' Mercedes is expanding production in Hungary, where its Kecskemét plant will eventually be able to produce up to 400,000 vehicles per year. Management has previously warned that production capacity at German plants significantly exceeds the company's needs.