Mercedes-Benz Strikes a Delicate Balance: Job Cuts, AI Targets, and a Bold Product Pipeline as Shares Flirt with Lows

Mercedes-Benz slashes costs and boosts AI adoption while battling union fury over 40-hour workweek, as stock nears 52-week low and China market weighs.

Mercedes-Benz is walking a tightrope. The Stuttgart automaker must slash costs to protect margins while pouring money into new models and fending off a labor revolt at home. Its stock, down more than a quarter this year, is trading just a whisper above a 52-week low of €43.99, and the pressure is mounting from all sides.

The flashpoint for internal tensions is a push by supervisory board chairman Martin Brudermüller to reintroduce the 40-hour workweek, a move he argues would boost productivity at German plants. The IG Metall union has greeted the proposal with fury, raising the specter of a protracted conflict. CEO Ola Källenius, meanwhile, has waded into broader policy debates, voicing support for pension reforms that shift toward greater capital funding and calling for a modernization of Germany’s economic framework. All this plays out against the backdrop of a binding agreement that prohibits compulsory redundancies until 2034 — forcing management to find productivity gains elsewhere.

That elsewhere is artificial intelligence. Over the past 18 months, Mercedes has doubled the adoption of AI across its internal processes to 60%, with a target of 70% by year-end. Chief human resources officer Britta Seeger has signaled tougher times ahead, stressing that cost structures in Germany are under intense scrutiny as new US tariffs and global competition bite. The aim is to slim down operations without triggering mass layoffs, though the company is preparing to cut a significant number of jobs — potentially in the mid-single-digit percentage range. Together with peer BMW, that could amount to as many as 16,000 positions across the industry, given each group employs roughly 160,000 people.

Investors have not been soothed. The stock closed at €45.19 on Tuesday, representing a decline of almost 27% since the start of the year. The Relative Strength Index, at 34.2, is approaching oversold territory, but the longer-term trend remains firmly bearish: the share price sits more than 18% below its 200-day moving average. A recent profit warning from BMW for the second half of 2026 has only darkened the mood for German auto stocks.

Strategically, Mercedes has reversed its earlier "Electric Only" ambition in favor of an "Electric First" approach, acknowledging that battery-electric vehicles still account for only around 20% of the European new-car market, according to fresh registration data from industry body ACEA. The company now plans to keep building modern combustion-engine models deep into the 2030s. Analysts have praised the pragmatism but continue to flag the weak Chinese market as the single biggest risk.

Despite the cost squeeze, the product pipeline remains full. Mercedes is testing the new AMG CLE 63 on the road, with a market launch expected around early 2027, and is preparing a "VLE Grand Limousine" boasting 800-volt architecture and a range of 700 kilometers. The group will report second-quarter earnings on July 28, giving management a chance to demonstrate how its strategy is translating into margin performance — and whether the shares have finally found a floor.