Mercedes-Benz Faces a Two-Front Battle: Washington Politics and German Payrolls

Mercedes fights a US bill that could shut it out of America while pushing 800 million euros in German labor savings; Deutsche Bank cut its target to 70 euros.

Mercedes-Benz is discovering that its toughest adversaries are no longer rival automakers. The Stuttgart manufacturer is simultaneously fighting to keep its vehicles on American roads and to convince its German workforce that the company can still afford to build cars at home. The stock's performance tells the story of that squeeze: at 40.18 euros following Thursday's close, the shares sit just 1.0 percent above their 52-week low, having surrendered 33 percent since the start of the year.

The transatlantic problem stems from a US bill aimed at companies in which Chinese shareholders hold stakes exceeding 15 percent. According to Reuters, Mercedes is in ongoing talks with the sponsor of the legislation to make sure it is not shut out of the American market. Losing access to North America would deal a heavy blow to the automaker, which is why the political negotiation carries such weight.

A Cost Base That No Longer Travels

Back in Germany, the board has been blunt: domestic manufacturing is no longer internationally competitive, and high labor costs are the chief culprit. Keeping every home plant alive, management argues, requires strict savings and better framework conditions. That message has already come with a warning—one manager told employees that two factories are at risk.

The numbers under discussion are substantial. German media report that the company aims to cut labor costs by 800 million euros, with longer hours at unchanged pay and reductions or eliminations of special payments on the table. Mercedes has not confirmed the figure, pointing instead to ongoing talks with employee representatives. Reuters reported Tuesday that the manufacturer also intends to largely scrap home-office arrangements as part of the payroll dispute. And in December, according to Handelsblatt, a fresh voluntary severance program is set to launch, offering individual packages to collective-bargaining staff and parts of the indirect management ranks.

Deutsche Bank Trims Its Target

Analysts are watching the standoff closely. On Tuesday, Deutsche Bank Research lowered its price target on the DAX-listed stock from 73 to 70 euros, while keeping its "Buy" rating—a signal that the analysts still see meaningful upside from current levels despite the depressed price. The shares traded at 40.02 euros that day, down 1.3 percent, with losses since January running at 34 percent at that point.

Uncertainty over the future cost structure and margin trajectory explains much of the market's restraint. Yet the company is not standing still. To counter the weak share price, management has turned to capital measures: under a buyback program launched roughly a month ago—covering up to 58 million shares for a maximum of one billion euros—Mercedes repurchased another 895,000 securities in the week of September 21 to 25. That lifted the total acquired so far to just under three million shares. On the investor side, asset manager BlackRock reported a total voting rights stake of 6.04 percent on September 25.

Betting on Software and Showroom Appeal

Even amid the austerity drive, Mercedes continues to modernize its model lineup and vehicle software. To speed up its progress in automated driving, management is leaning harder on outside partnerships. A deal with Wayve will see the company's autonomous driving system integrated into future vehicles, with the collaboration scheduled to begin within the next two years. There is also a product win to celebrate: the electric GLC was named "German Premium Car of the Year 2027."

None of that has yet managed to lift sentiment, which remains overshadowed by the restructuring questions at home and geopolitical risks abroad. The next real test comes on October 28, when Mercedes-Benz Group publishes its interim report for the third quarter of 2026. The conference call that follows should clarify how deeply the current burdens have actually dented operating profit. Until a workable agreement on labor costs is reached and the US standoff is resolved, skepticism is likely to keep the upper hand.