Mercedes-Benz Stock Hovers Near Nadir as Deepening Cost-Cuts Ignite Labor Conflict

Mercedes-Benz shares trade just above 52-week low after a 30% YTD drop, as management's cost-cutting plan sparks union pushback. Analysts see value but technicals remain bearish.

Mercedes-Benz shares are clinging to a wafer-thin cushion above their 52-week low as management escalates a cost-reduction campaign that has already drawn fierce resistance from the German workforce. The stock closed at €43.27 on Friday, a mere 0.62% above the year’s worst level, compounding a near-30% decline since January.

The pressure on the equity stems from an operating environment that leaves little margin for error. In the first quarter, the carmaker’s core passenger car division reported an adjusted EBIT of €933 million, translating into a return on sales of 4.1%. That figure lies at the lower end of the full-year target range of 3–5%, underlining just how tightly costs must be managed to meet profit goals.

In response, management has turned to head-office levers. In a letter to employees on Friday, the board outlined plans to increase working hours without corresponding pay raises, shift certain product lines and administrative functions abroad, and delay a so-called transformation bonus originally scheduled for July. That bonus, equivalent to 18.4% of monthly salary, will now be paid in 2027. Roughly 90,000 of the company’s 108,000 German employees are affected.

The move has triggered immediate pushback from the works council, which argued that the company’s challenges do not lie with its workforce yet workers are being asked to shoulder the burden. The resulting tariff-policy dimension could slow or raise the cost of implementation, potentially offsetting any margin benefits from the savings program.

Analysts remain cautiously positive on valuation grounds. Bernstein Research maintains a “Market-Perform” rating with a €61 price target, pointing to Mercedes-Benz’s position in electric mobility and resilient supply chains, as well as China’s strong grip on critical raw materials. That target, however, stands nearly 40% above the current share price — a gap that market participants have so far chosen to ignore.

Technicians see little reason to buy the dip. The stock trades well below its 200-day moving average of €55.05, and the relative strength index of 29.2 signals an oversold condition without guaranteeing a reversal. If the price breaks sustainably below €43.01 — the intraday low recorded on the same day as Friday’s close — the next leg of selling could accelerate.

Investors now look to the calendar for a catalyst. Mercedes-Benz will hold a pre-close call with analysts and investors on July 14, followed by full second-quarter results on July 28. Those numbers will reveal whether cost controls and profitability targets are converging — or whether the share price has further to fall before a floor appears.