Mercedes-Benz has informed employees that it plans to reduce costs by increasing working hours without raising salaries.
The proposed changes would apply across the company, including development, sales, administration and production.
Mercedes-Benz Seeks Lower Labour Costs
CEO Ola Källenius and other senior executives outlined the plan in a message sent to employees on Friday.
The management team said that Mercedes-Benz must reduce its hourly labour costs across all divisions. To achieve this, employees could be required to work longer while receiving the same salary.
The company sees the measure as part of a wider effort to improve efficiency and control expenses.
Special Employee Payment Delayed Until 2027
Mercedes-Benz will also postpone a special payment that was due in July.
The payment is equal to 18.4% of one month’s salary. Employees are now expected to receive it in 2027 instead.
Delaying the payment could help the company reduce its immediate expenses. However, the decision may increase tensions between management and the workforce.
More Operations Could Move Outside Germany
The German carmaker also plans to relocate some products and administrative functions to other countries.
Moving these activities outside Germany could allow Mercedes-Benz to benefit from lower operating and labour costs.
However, the strategy may raise concerns about the future of jobs at the company’s German operations.
Works Council Criticises the Cost-Cutting Plan
The Mercedes-Benz works council criticised the proposal and argued that employees should not have to carry the burden of the company’s difficulties.
According to the council, the challenges facing Mercedes-Benz were not caused by its workforce.
Employee representatives are therefore likely to resist measures that increase working hours without offering additional pay.
European Carmakers Face Rising Pressure
Mercedes-Benz and other European carmakers are facing difficult market conditions.
High U.S. import tariffs have increased pressure on vehicle manufacturers that export to the American market. Meanwhile, the conflict in the Middle East has pushed up costs across the global automotive industry.
These challenges have added to existing concerns about weaker demand, intense competition and the expensive transition to electric vehicles.
Mercedes-Benz Shares Fall More Than 25%
Mercedes-Benz shares have declined by more than 25% since the beginning of the year.
The stock has also underperformed the broader STOXX 600 index covering European carmakers and automotive parts manufacturers.
Overall, the proposed longer working hours, delayed employee payment and relocation of some operations show how aggressively Mercedes-Benz is trying to reduce costs. However, the measures could lead to further opposition from employees and labour representatives.
