Mercedes-Benz Hits Low Gear: Worker Unrest and Margin Squeeze Overshadow F1 Climate Push

Profitability crisis as IG Metall protests against wage cuts and share price drops 28% year-to-date; luxury segment shines but cost discipline needed before Q2 results.

The tension gripping Mercedes-Benz is playing out in starkly different arenas. Inside the factory gates, the IG Metall union is mobilising tens of thousands of employees for nationwide protests on Friday, targeting plants in Sindelfingen, Untertürkheim and Rastatt. On the trading floor, the stock is dangerously close to its 52-week low, having lost 28.72% of its value since the start of the year. The two stories are converging on the same painful question: can the carmaker restore profitability without alienating its workforce or losing its market credibility?

At the heart of the labour dispute is a direct hit to compensation. Around 90,000 German employees were expecting the contractual “Transformationsbaustein” payment in July — a bonus worth nearly 18% of a monthly salary. Management has postponed that payout until next year. At the same time, the company is discussing a return to the 40-hour working week without any wage adjustment, a move the board argues is essential to cut the cost per hour and defend competitiveness. The union sees it as an assault on core collective bargaining agreements.

Investors, meanwhile, have their eyes trained on very different metrics. Mercedes-Benz shares closed Wednesday at €43.95, just a whisker above the 52-week trough of €42.64 set in late June. A slight bounce on Thursday pushed the stock to €44.41, but the technical picture remains bleak. The equity is trading roughly 20% below its 200-day moving average of around €55, and the relative strength index stands at 33.9 — deep in oversold territory. The message from the market is clear: sustainability announcements alone will not lift this stock.

The company did try to offer a greener narrative. The Mercedes-AMG F1 team unveiled a Climate Transition Action Plan targeting net-zero emissions across all scopes by 2040, with an interim goal of a 42% reduction by 2030. For a performance brand like AMG, the climate strategy is intended to burnish the image, but it carries no operational profit forecast for the parent group.

What does matter for the bottom line is the performance of the luxury car business. In the first quarter, the adjusted return on sales in the passenger car division slid to 4.1%, with operating profit reaching just €933 million. The one bright spot was the luxury segment, which captured a 14.7% global sales share — at the upper end of the company’s target range. Stefan Weckbach, the newly appointed AMG chief who took the reins at the start of the month, must now defend margins on the high-end models that generate the bulk of the group’s earnings.

Management continues to stand by its full-year forecast, insisting that operating profit will exceed last year’s level. Whether the aggressive cost discipline is already shoring up margins will become clear when Mercedes-Benz publishes its second-quarter results on 28 July 2026. Until then, workers are venting their frustration through protests, and investors are demanding hard evidence of cost control and cash flow. The F1 climate plan may polish the brand, but only stronger margins can rescue the share price.