Mercedes-Benz has stopped all further investment in its German manufacturing locations, Reuters reported, citing an internal company memo.
According to the memo, it is also evaluating potential site closures as part of the efforts to reduce domestic production costs.
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The decision follows unsuccessful discussions between executive management, the company’s works council, and union representatives over reductions in labour costs.
Executive board members discussed the situation in an interview shown on the carmaker’s intranet.
In September, the company’s production chief Michael Schiebe warned that two German factories could face closure if negotiations did not make progress.
Mercedes-Benz production chief Michael Schiebe said management had “jointly decided to halt all further investments in our German locations.”
The company is continuing discussions with IG Metall, Germany’s largest industrial union, while preparing to assess possible site shutdowns.
“We all want to avoid plant closures at all costs. Unfortunately, however, we must now explore this option in more detail,” said Mercedes-Benz management board member Britta Seeger in the worker memo.
The suspension followed Mercedes-Benz’s latest financial update, published late last month, in which it lowered its profit guidance for the 2026 financial year.
The company cited a “more challenging market environment in China and higher fourth quarter costs for raw materials and product lifecycle measures”.
The moves come alongside restructuring announcements across Germany’s automotive manufacturing sector and supply chain.
Schaeffler said last week that it would eliminate 3,460 jobs and close five European facilities, including four in Germany, citing weak demand for internal combustion engine vehicles.
Volkswagen is due to begin formal discussions with IG Metall on 24 November on restructuring proposals that could lead to up to 100,000 job cuts and the closure of up to four German assembly plants.
Porsche decided in July to cut an additional 5,000 jobs by 2035, taking planned reductions at the sports car manufacturer to 9,000 roles.
