Mercedes-Benz freezes new German investment as labor costs top Eastern Europe fivefold

German automaker Mercedes-Benz announced a halt to all new investments at its sites in Germany and is considering closing factories after months of negotiations with labor representatives over cost reductions failed.

Hilal Times Editorial DeskNovember 12, 2026, 10:26 PMUpdated: November 12, 2026, 10:57 PM

Mercedes-Benz freezes new German investment as labor costs top Eastern Europe fivefold

Mercedes-Benz, one of Germany’s best-known brands, has decided to freeze all new investments at its industrial sites in Germany and consider the possible closure of some factories after months of negotiations with labor representatives failed to produce an agreement on reducing costs.

Michael Schiebe, the board member responsible for production, said in an interview published on the company’s internal network and confirmed by a spokesperson that the board had unanimously decided to halt all additional investments at its German sites. He explained that the cost of an hour of production labor in Germany is in some cases five times higher than at the group’s factories in Eastern Europe.

مصنع مرسيدس-بنز في أونترتوركهايم ومتحف الشركة في شتوتغارت (أرشيف)

“We have to examine what we can afford”

Human Resources Director Britta Seeger said the company was now “forced to examine in a tangible and detailed way which sites in Germany we can still afford,” adding: “We all want to avoid closing factories at any cost, but unfortunately we have to pursue this option more seriously.”

Schiebe warned in October that an assembly plant and a plant producing transmission systems could be closed if costs were not reduced, although the company has not yet identified any specific site. He indicated that new models could then be produced exclusively outside Germany.

The decision comes amid mounting pressure on the company. Last month, it cut its forecast for 2026 operating profit to €5.8 billion, while its sales in China fell by 29% during the first nine months of the year. The IG Metall union opposes the cost-cutting plans, while the company is seeking savings of up to €800 million, according to WirtschaftsWoche.

Images: Wikimedia Commons (CC BY-SA 3.0, CC BY 3.0; archive)

Mercedes-Benz freezes new German investment as labor costs top Eastern Europe fivefold