Mercedes-Benz halts all new investment in its German plants and starts weighing closures, citing labor costs up to 5 times Eastern Europe's

Germany is where the modern car industry was born, and Mercedes-Benz still runs its headquarters and most important factories around Stuttgart. For the past two years, German automakers have been squeezed by falling sales, shrinking profits and high costs, and Volkswagen and Audi have both launched large savings programs. Mercedes management has spent months negotiating with employee representatives, asking workers to accept changes to hours and pay. Those talks have gone nowhere.

According to German business daily Handelsblatt, which reported the news at 10:57 AM EST on Nov. 12, 2026 (23:57 Beijing time), Mercedes posted an interview with board members on its company intranet that day. "We have jointly decided on the board to stop all further investments in our German locations," production chief Michael Schiebe said. Britta Seeger, the board member responsible for human resources, said that despite intensive talks there is still "no corridor for a solution," so the company is "now forced to examine concretely and in detail which locations in Germany we can still afford." She said Mercedes wants to avoid plant closures at all costs but now has to pursue that option "more concretely," and that without an agreement the company will take "very tough steps." Handelsblatt wrote that plant closures and further moves of production abroad have become more likely.

Why now? According to Euronews, Mercedes says an hour of labor in its German plants can cost up to five times as much as at its sites in Eastern Europe. Management's proposals include longer working hours without matching pay increases, and extras such as profit sharing, holiday pay and Christmas bonuses could also be cut. Those demands have already sparked employee protests. A few weeks ago, Schiebe warned that two German plants could close if costs did not come down: one vehicle assembly plant and one powertrain plant, the kind of factory that builds core components such as engines, transmissions and electric drive units. Mercedes assembles cars in Sindelfingen, Rastatt and Bremen, and its powertrain sites include Stuttgart-Untertürkheim, Affalterbach, Berlin, Hamburg, Kamenz and locations in Thuringia. The company has not said which plants could be affected. The statements came in the middle of labor negotiations, and several outlets read them as a way to pressure the employee side. How long the investment stop lasts, and whether any plant actually closes, depends on how those talks end.

Why it matters: a century-old German luxury carmaker is saying openly that, at today's cost levels, it will not invest at home. New factory investment usually means new models, new production lines and upgrades for electric vehicles, so a freeze effectively pauses the future of these plants. If closures follow, the impact would reach beyond Mercedes employees to the many parts suppliers around them.

For everyday people, this won't change Mercedes prices or availability overnight. Over the longer run, though, future Mercedes models are more likely to be built outside Germany. For people who work in the auto industry, it is another sign that building cars in high-cost regions is under growing pressure and that manufacturing jobs keep shifting toward cheaper locations. The next things to watch are whether Mercedes and its employee representatives reach a deal, and whether the company names specific plants.

Original sources published: Handelsblatt, Nov 12, 2026, 23:57 Beijing time / 10:57 AM EST; Euronews, Nov 13, 2026, 03:22 Beijing time / Nov 12, 2026, 2:22 PM EST