Mercedes-Benz Plans to Cut €800 Million in Labor Costs in Germany

Mercedes-Benz is considering cutting labor costs in Germany by around €800 million, according to a WirtschaftsWoche report cited by Reuters, which spoke to three people familiar with the matter. The move comes as the German auto industry faces mounting pressure from rising production costs and Chinese competition. The sum is huge.

Options on the Table: Unpaid Extra Hours and Adjusted Bonuses

Options under review at Mercedes include increasing working hours without extra pay, adjusting holiday and Christmas bonuses, and potentially canceling some special payments to employees. The company declined to comment on what it called speculation about ongoing cost-cutting discussions.

Warnings of Plant Closures

Mercedes-Benz management told workers that car manufacturing in Germany has become too expensive, urging employees to step up efforts and meet cost-reduction targets. Management warned that two of the company's plants in Germany could be closed if targets aren't met. The threat isn't theoretical.

The pressure isn't limited to Mercedes. Volkswagen is carrying out its largest restructuring in history, while BMW is cutting thousands of jobs. The entire German auto sector is reshuffling its deck.

These developments come as competition from low-cost Chinese automakers intensifies, alongside challenges related to tariffs and the rising costs of developing and producing electric vehicles. The German market is no longer the only game in town.

Meanwhile, used Mercedes prices in Egypt remain affected by these shifts. Will the local market see price changes? Keep watching.