Mercedes Warns Two German Plants Could Close Unless Costs Drop

Mercedes-Benz outlines conditional closure risk for one assembly plant and one powertrain site in Germany, tied directly to labor cost cuts.

By: Brian Potter

Sep 22, at 11:00am ET

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Mercedes warned one assembly plant and one powertrain plant in Germany could close if labor costs do not fall.
The company named no specific sites and gave no timetable for any potential closures.
Mercedes says costs at its Kecskemét, Hungary plant run 70 percent lower than its German sites.

Mercedes-Benz told employees in Sindelfingen this week that keeping every German plant open is not guaranteed. Production chief Michael Schiebe said one assembly plant and one powertrain plant could shut down if labor costs do not come down.

The warning is conditional as no location has been named and no timetable has been set, but the company has now identified what's at stake by tying the future of two plants directly to whether cost cuts get done.

Two German Plants Face Possible Closure

Schiebe laid out the warning during an employee meeting, describing it as a choice between mutually acceptable savings and losing capacity outright. Mercedes-Benz says its goal is still to retain every German site, according to Reuters.

Schiebe did not get more specific as he described the two at-risk sites only by function: a body-shop plant handling final assembly, and a separate powertrain plant that builds engines, transmissions or electric drive components.

That narrows the field considerably as Mercedes has final assembly at Sindelfingen, Rastatt and Bremen. Powertrain production runs across seven more German sites: Untertürkheim, Affalterbach, Berlin, Hamburg, Kamenz, Kölleda, and Arnstadt. None of the ten locations has been confirmed as the closure candidate, and Mercedes has not ranked them by risk.

Mercedes-Benz EQA production at the Rastatt plant, Germany

Why Germany Is Not Competitive Anymore

The company's core argument is cost, not capacity. Mercedes says production in Germany is no longer competitive by international standards, largely because of labor expenses that run higher compared to plants the company runs elsewhere in the world.

The comparison Mercedes is making is stark. Costs at its Kecskemét plant in Hungary run 70 percent lower than in Germany, a gap that has already shaped decisions like moving small-car and G-Class production to Hungary.

Mercedes is not alone in making this case to its own workforce. Volkswagen has already started its own restructuring after a profit warning, and Audi has flagged closure risk at its Neckarsulm plant for similar reasons.

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A Mercedes spokesman confirmed Schiebe's remarks but did not say when a decision would come. That leaves the warning exactly where the company wants it for now, a pressure point in ongoing talks over labor costs.

Motor1's Take: Mercedes' warning is leverage in wage talks. It shifts risk onto workers, suppliers and local economies. Watch whether management names specific sites or makes formal closure announcements. If talks fail, restructurings could spread to suppliers and competitors.