Mercedes-Benz Trades Near Yearly Low as Union Resistance Meets Buyback Support

Mercedes-Benz shares are hovering just above their 52-week trough, caught between an aggressive internal cost-cutting drive and mounting labor resistance at the company's German home base. The stock closed Thursday at EUR 40.18, a whisker away from the yearly low of EUR 39.77, and has shed 34% since the start of the year — a slide that underscores how deeply investor confidence has eroded.

The tension crystallized this week when IG Metall flatly rejected management's proposal to stretch the workweek to 38 hours without additional pay. The union insists on upholding the existing 35-hour collective agreement, setting up what could become a protracted standoff over the competitiveness of Mercedes-Benz's domestic plants.

A Savings Target in Dispute

At a works meeting on Monday, company leadership pressed employees for significant concessions, with longer hours and even plant closures reportedly on the table. According to SWR, citing WirtschaftsWoche, the automaker may be targeting EUR 800 million in savings on German labor costs. Mercedes-Benz has declined to confirm that figure, saying only that talks with employee representatives are ongoing.

The mere mention of possible site shutdowns has soured the mood on the factory floor. Should negotiations drag on or collapse, the resulting protests and production disruptions could weigh on profitability for several quarters. A failure to hit the reported savings goal would compound the damage.

Buybacks and BlackRock's Growing Stake

Against that uneasy backdrop, the company is putting its balance sheet to work. Between September 21 and 25, Mercedes-Benz repurchased 895,000 of its own shares for roughly EUR 38 million under its buyback program. The world's largest asset manager, BlackRock, disclosed a total voting rights position of 6.04%, of which 5.87% is held directly through shares — a signal that long-horizon institutional investors see value at current levels.

A voluntary severance program in Germany is set to launch in December, focused on indirect functions while leaving manufacturing untouched. Media reports suggest the company also intends to permanently reduce spending in procurement and administration.

China and the Premium Margin Test

The bigger strategic question looming over the stock is whether Mercedes-Benz can defend its profitability in China, where demand for luxury vehicles has come under visible pressure in recent months. Without stable returns in the high-margin upper segment, the company's earnings engine loses much of its punch.

Analysts are tempering expectations ahead of the reporting season. Tim Rokossa of Deutsche Bank Research said Tuesday that the upcoming results are unlikely to shift the sector narrative, and flagged China as a structural challenge. The bank trimmed its price target from EUR 73 to EUR 70 while keeping a Buy rating. HSBC took a milder approach on September 24, nudging its target from EUR 65 to EUR 63 and reaffirming its buy recommendation.

Rastatt's New GLA as a Volume Lever

On the product side, series production of the new GLA began in mid-September at the Rastatt plant. The compact SUV will be offered with both electric drivetrains and 48V gasoline variants, giving Mercedes-Benz flexibility to respond to shifting customer preferences. A smooth ramp-up is critical for plant utilization and for delivering the volume boost the company needs in the competitive compact segment.

What to Watch

Chart watchers have zeroed in on the EUR 39.76–39.77 support zone. Holding above it could allow the stock to consolidate at depressed levels; a decisive break would likely trigger additional selling pressure.

The next hard data point arrives on October 28, when Mercedes-Benz Group publishes its third-quarter interim report and discusses the figures on a conference call. Until then, any concrete news from the savings negotiations is likely to dictate whether the shares find a floor — or extend their descent.