Mercedes-Benz Sets 800 Million Euro Target for German Labor Costs as Workers Push Back

Mercedes targets up to €800M in German labor savings; 20,000 workers reject terms as talks weigh plant closures and longer hours.

Mercedes-Benz has opened a high-stakes confrontation over the cost of building cars in Germany, with management targeting up to 800 million euros in savings on domestic labor expenses and roughly 20,000 employees gathering at the Sindelfingen site to reject the terms on offer.

The figure, first reported by WirtschaftsWoche, sits at the center of a dispute that production chief Michael Schiebe framed bluntly at a works meeting: without meaningful concessions on costs, the company could shutter one passenger-car assembly plant and one powertrain facility in Germany. It is a threat that carries weight precisely because Mercedes has been steadily building out capacity abroad.

A Hungarian Yardstick

Kecskemét, in Hungary, has already doubled its annual production capacity to 400,000 vehicles. Factor costs there ran about 70 percent below German levels in 2025, giving the board a tangible benchmark when it argues that domestic plants must adapt. On a group level, Mercedes wants production costs per vehicle to fall 10 percent by 2027 against a 2024 baseline, and it aims to lift the share of vehicles built in low-wage countries from 15 percent in 2024 to 30 percent by 2027.

Schiebe said the preference remains to keep every German site running. The international cost gap nonetheless lays out the scale of the adjustment the home plants face.

Working Time at the Heart of the Standoff

Management's opening position centers on extending the weekly working time from 35 hours to as much as 40, with pay held flat. Cuts to, or the outright elimination of, holiday and Christmas bonuses and other special payments are also on the table.

Labor representatives have shown limited willingness to talk but reject the package in that form. The works council is exploring a two-year, two-hour weekly increase in working time, tied to firm commitments on products and investment. Any change would additionally require the approval of IG Metall, and employees formally still hold a job-security guarantee running to 2035. IG Metall has ruled out any softening of the 35-hour week, and nothing has been negotiated or formally agreed so far.

Buybacks and a Bruised Share Price

Investor nerves over the standoff and the company's direction are visible in the trading. The stock fell 2.1 percent on Thursday to 41.41 euros, hovering just above its 52-week low of 41.12 euros. Measured from the start of the year, the shares have lost 31 percent, a decline that already discounts substantial strain.

Running alongside the conflict is Mercedes's ongoing buyback program. Between September 14 and 18, the company repurchased a further 475,000 of its own shares; across the whole of September 1 to 18, the total reached roughly 2.08 million papers.

What Hangs on the Talks

For shareholders, the decisive variable is whether the board can push through longer hours without extra pay. A deal would ease pressure on the core business's operating margin right away. Failure would shift the focus toward plant closures, which bring heavy provisions up front.

The risk is compounded by timing. IG Metall is heading into the metal and electrical industry's collective bargaining round, where it is seeking 5 percent more pay over twelve months for 3.7 million workers. A plant-closure debate colliding with a confrontational wage fight raises the prospect of warning strikes and supply interruptions — a costly combination in a soft European market where Asian rivals keep gaining share.

Regional negotiations in the metal and electrical sector begin in early October, with the peace obligation expiring at the end of that month. Warning strikes could follow from the start of November. Mercedes is due to report third-quarter figures on October 28, giving investors a further checkpoint. In the meantime, chart watchers are treating the 41.34 euro low as the level to hold; a sustained break below it would invite wider valuation discounts.