Mercedes slams brakes on German investment
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Mercedes slams brakes on German investment — RT Business News
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Mercedes slams brakes on German investment
The auto giant is struggling with high production costs, falling sales in China, and stalled talks over labor cuts
A general view of production lines at the Mercedes-Benz assembly plant in Rastatt, Germany. © Getty Images / Florian Wiegand
German auto giant Mercedes-Benz has frozen investment in its domestic factories and is considering plant closures, according to an internal memo cited by multiple media outlets. The decision comes as high production costs and fierce competition from China squeeze Germany’s struggling car industry.
In the memo published on the company’s intranet on Thursday, production chief Michael Schiebe reportedly said current cost structures make further investments in Germany impossible.
Manufacturing labor in the country can cost up to five times as much as at Mercedes’ Eastern European facilities, according to industry data.
Months of negotiations with employee representatives over proposed labor-cost cuts have failed to produce an agreement.
The investment freeze could affect factory upgrades, expansion, and preparations for future car models. It does not mean an immediate halt to production, but casts doubt on the long-term future of the plants.
Mercedes has also suffered a sharp sales slump in China, the world’s largest car market, where it faces fierce competition from Chinese automakers. Its sales in the Asian country plunged 31% year on year in the third quarter of 2026, compared with increases of 5% in Europe and 6% in the US. In October, the company cut its annual profit-margin forecast, citing worsening conditions in China and higher costs.
Mercedes is the latest German automotive giant to scale back domestic investment. On Wednesday, Reuters reported that Volkswagen abandoned a major manufacturing modernization project at its flagship Wolfsburg plant. The decision comes as the company pursues a sweeping restructuring plan involving 100,000 job cuts across the group and an uncertain future for four German factories.
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