Mercedes-Benz Ties Autonomous Driving Deal to Sweeping German Cost Overhaul

Mercedes-Benz warns two German plants could close as it targets EUR 800 million in labor cost cuts and partners with Wayve on self-driving tech.

Mercedes-Benz is pairing a push into self-driving technology with a broad restructuring of its domestic operations, as management moves to close a cost gap it considers fatal to the company's German industrial footprint.

The Stuttgart automaker has struck a strategic partnership with Wayve to embed the British firm's autonomous driving system in future Mercedes models, with series production targeted within the next two years. The tie-up runs in parallel with a far more contentious effort on the labor side, where executives are negotiating working-time models and on-site attendance rules while preparing a voluntary severance program to thin out indirect functions.

Management Warns Two Plants at Risk

Production chief Michael Schiebe cautioned that without meaningful savings, a German assembly plant and a powertrain facility could be shut down. He pointed to the high level of labor costs as the main reason domestic manufacturing is no longer competitive on a global scale. The company reaffirmed its fundamental commitment to keeping all German sites and jobs, though it declined to name which plants are in the frame.

According to WirtschaftsWoche, the plans aim to cut labor costs at the German locations by EUR 800 million. Reuters reported that longer weekly hours without extra pay were on the table, with a demand for three additional hours per week. Adjustments to vacation and Christmas bonuses as well as special payments were also under consideration.

Severance Program and Office Mandate

The voluntary severance package, relaunched today, is expected to start in December and targets employees in indirect areas as well as some managers. Exits will continue to follow the principle of double voluntariness, and Mercedes-Benz has not set a specific headcount reduction target.

Alongside the buyouts, the group has terminated its existing company agreement on mobile working. Managers would be allowed to order full-time staff to attend the office up to four days a week without giving a separate justification. The arrangement is slated to take effect on January 1, 2027, contingent on approval from the works councils at the individual sites.

Deutsche Bank Flags China as the Core Problem

The efficiency drive lands against a persistently difficult industry backdrop. Deutsche Bank Research adjusted its view on the stock yesterday, with analyst Tim Rokossa trimming the price target to EUR 70 from EUR 73 while keeping a "Buy" rating. Rokossa identified China as the biggest construction site for the Stuttgart manufacturer, arguing that the slowdown there is not a temporary cyclical dip but a deep-seated structural problem for established premium carmakers.

Shares Bounce Off a Fresh Low

The equity has been battered by the debate over cost cuts and possible plant closures. The stock is trading at EUR 40.76, down 32% since the start of the year, and remains close to its 52-week low of EUR 40.14, which was touched only the previous day.

Today brought a modest reprieve: the shares gained 1.4% to EUR 41.23 in current trading after yesterday's slide to the yearly trough. Attention now turns to next month, when Mercedes-Benz publishes its third-quarter 2026 financial figures on October 28, offering a detailed read on the group's operating health. Whether stricter cost discipline combined with new technology initiatives can durably shore up investor confidence will hinge largely on how the site agreements are implemented.