Mercedes-Benz Faces Washington Lobbying Battle and German Cost Standoff as Shares Hug Yearly Low

Mercedes-Benz weighs a US bill targeting Chinese stakes above 15% and German labor cost cuts, as its stock sits near a 52-week low.

Mercedes-Benz is navigating a pair of unrelated but equally uncomfortable pressure points this week, with its ownership structure under scrutiny in the United States and its domestic cost base still the subject of an unresolved confrontation with labor.

In Washington, US Senator Bernie Moreno said talks are underway to keep a proposed bill targeting Chinese vehicles from shutting the Stuttgart automaker out of the American market. The draft would bar companies with Chinese shareholder stakes above 15% from selling cars in the US. Chinese investors hold a passive stake of just under 20% in Mercedes-Benz, according to Reuters, meaning the legislation as written could bite hard in a key North American market. The negotiations are aimed at securing an exemption or clarification for affected international manufacturers.

Profitability Under Strain on Several Fronts

The political uncertainty lands on top of an already difficult operating backdrop. On Tuesday, Deutsche Bank Research trimmed its price target on the stock to EUR 70 from EUR 73, while keeping its "Buy" rating. Analyst Tim Rokossa pointed to persistent structural challenges in the Chinese market that continue to weigh on the company's operating business.

At home, the picture is no brighter. Management is pressing for significant reductions in German labor costs, a demand the board reiterated at a works meeting on Monday, according to SWR. On the table is an extension of the working week from 35 to 38 hours without additional pay. Company representatives have warned that two German plants would have to close if costs cannot be brought down.

Mercedes-Benz has previously told Reuters that domestic manufacturing is no longer internationally competitive given the high cost level. Media reports, citing WirtschaftsWoche, indicate the group plans to cut around EUR 800 million from German personnel costs, with measures under discussion including longer hours without compensation and reductions or elimination of bonus payments. The company has not confirmed that specific figure and declined to comment on the negotiations, pointing instead to ongoing talks with employee representatives.

Production chief Michael Schiebe had already sounded the alarm on 21 September, warning that without substantial cost reductions a German assembly plant and a German powertrain facility would have to shut. The company has said it wants to preserve German sites and jobs provided productivity rises, while simultaneously classifying domestic production as no longer competitive internationally because of high labor costs.

Market Reaction and the Road Ahead

The combination of structural and regulatory headwinds is clearly visible in the share price. The stock closed at EUR 39.90 on Friday, leaving it just 0.5% above its 52-week low of EUR 39.70. Since the start of the year, the shares have lost 34%.

Thursday's session brought additional pressure as a broad selloff swept the German equity market, with market watchers pointing to the country's inflation rate of 3.3% in September and higher energy costs.

Investors will get fresh data points in the coming weeks. Mercedes-Benz holds its pre-close call for the third quarter on 8 October, with full figures for the period due on 28 October. The reports are likely to be scrutinized for how heavily the China business and restructuring measures are weighing on earnings.

Alongside the cost debate, the group is pushing ahead with its technological repositioning. On 24 September, Mercedes-Benz agreed with ProLogium Holding to jointly test fourth-generation solid-state battery cells, a cooperation that gives the automaker priority access to the new cell generation's test runs.