Mercedes-Benz Labour Standoff Clouds Green Aluminium Pledge as Jefferies Trims Rating

Mercedes-Benz has committed to a long-term aluminium supply arrangement with Hydro and joined the First Movers Coalition's aluminium track, even as unresolved cost negotiations with its workforce leave the future of its German plants in question.

The automaker pledged on Wednesday to source at least 10% of its annual primary aluminium requirement in line with the coalition's criteria by 2030. Under the Hydro agreement, the carbon footprint of the metal supplied is to fall step by step — to 3.5 kg CO?e per kilogram by 2028 and to 3.0 kg CO?e per kilogram from 2030. The company also fleshed out its CO? reduction pathway for 2039 against a 2019 baseline and said it would report progress on that trajectory more transparently, with supply-chain measures forming part of the announced decarbonisation push.

Labour Talks at an Impasse

Those environmental commitments sit alongside a far less settled picture on the shop floor. Management is seeking longer working hours without extra pay and is examining relocations and plant closures should talks on cost reductions fail to produce a deal, according to Handelsblatt. Employees and their representatives criticised the site debate on Friday and pressed for firm guarantees on jobs and plant utilisation. Works council chief Ergun Lümali, backed by IG Metall, pointed to the company's difficult position as he pushed back against the latest drive to sharpen the competitiveness of the German operations.

China Adds to the Pressure

The strain is not confined to Germany. Speaking at the Automobilwoche congress on Wednesday, CEO Ola Källenius said Mercedes-Benz needs to reshape its business model and systems in China, where the luxury market is currently running 30% below the prior-year level.

Analysts, meanwhile, have turned more cautious. Jefferies downgraded the stock from "Buy" to "Hold" on Tuesday and cut its price target to EUR 44 from EUR 46. Analyst Philippe Houchois cited a diminished liquidity cushion, weaker cash inflow and a lack of clarity over whether the share buyback will continue. The shares edged up 0.3% on Friday to EUR 40.67.