Mercedes-Benz Halts New Investments in Germany, Considers Plant Closures

Mercedes-Benz has announced it will halt all further investment in its German production sites and is actively considering plant closures, in a dramatic escalation of the crisis facing Germany’s automotive industry.

The plant closures decision was disclosed on Thursday, November 12, 2026, by Production Director Michael Schiebe in an interview published on the company’s intranet, ValidViewNetwork reports.

THE DECISION

Schiebe said the board had jointly decided to stop all further investments in German sites because the company could not invest under current cost structures.

“Despite numerous intensive talks, we currently see no corridor for a solution,” he said. “With today’s cost structures, we cannot invest in Germany”.

He noted that the cost of a production hour in Germany is sometimes up to five times higher than at locations in Eastern Europe. The discrepancy in administration is similarly high.

THE WARNING

Schiebe had already announced a few weeks ago that two German plants would be closed if costs were not reduced — a German assembly plant and a German powertrain plant.

Mercedes-Benz operates assembly plants in Sindelfingen, Rastatt, and Bremen. Powertrain plants are located in Stuttgart-Untertürkheim, Affalterbach, Berlin, Hamburg, Kamenz, Kölleda, and Arnstadt .

New models would be manufactured exclusively abroad if no agreement is reached, Schiebe warned.

THE NEGOTIATIONS

Human Resources Director Britta Seeger said the company needed a decision in negotiations with the works council over employee concessions.

“Currently, this is not foreseeable,” she said. “Therefore, we are now forced to examine concretely and in detail which sites we can still afford in Germany”.

She said closures should be avoided “at all costs,” but the option must now be pursued “more concretely” .

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The company is pushing for employees to work longer hours without additional pay, 40 hours instead of 35. For the works council and IG Metall, this is a red line, as the 35-hour week is a central achievement for the union.

IG Metall is demanding a 5 per cent pay increase in the ongoing metal and electrical industry negotiations. Seeger said such an increase would further drive up Germany’s already high labor costs .

THE ANALYTICAL LENS

The Mercedes-Benz decision is a watershed moment for German industry.

For decades, “Made in Germany” was a badge of quality and engineering excellence. But the economics have shifted. Labor costs in Germany are now up to five times higher than in Eastern Europe.

Energy costs are soaring. Competition from China is intensifying. And the transition to electric vehicles is demanding massive investment that German manufacturers are struggling to fund.

Mercedes is not alone. Volkswagen and Audi have also announced major savings programmes. The German auto industry, the backbone of Europe’s largest economy, is in crisis.

The human cost is immense. Thousands of jobs are at stake. Communities that have depended on these plants for generations face an uncertain future. The works council and IG Metall are fighting to protect their members, but the company says it cannot invest under current conditions.

The decision to halt investments is a negotiating tactic as much as an economic necessity. By threatening closures, Mercedes is pressuring the union to accept longer hours and lower costs. Whether it works remains to be seen.

But the message is clear: the German auto industry cannot compete on its current cost base. The future of manufacturing in Germany is being decided now. ValidViewNetwork reports.