Mercedes-Benz told staff on Friday that it will pursue cost reductions by increasing working hours without raising base salaries across all divisions. In a communication to employees, CEO Olaf Kallenius and other senior executives said the company needs to bring its cost per hour down in development, sales, administration and production.
The internal note conveyed that employees should expect to work more for the same pay across the organisation. In addition to the change in working time expectations, Mercedes-Benz said it will postpone a special payment equal to 18.4% of one month’s salary that had been scheduled for July, pushing that payment back to 2027.
The company also outlined plans to shift some products and administrative functions to locations outside Germany. The announcement did not provide further operational detail on which products or functions would move, only that some activities would be relocated beyond the company’s German sites.
The works council at Mercedes-Benz responded by saying employees are being asked to shoulder the burden even though the company’s difficulties are not caused by the workforce. That statement reflects a tension between management’s cost-cutting measures and employee representation.
Mercedes-Benz pointed to industry-level cost headwinds as part of the context for its measures. The company noted pressure from high U.S. import tariffs affecting European automakers and said the conflict in the Middle East has elevated costs across the global automotive industry.
On financial markets, shares of Mercedes-Benz (ETR:MBGn) have fallen by more than 25% so far this year, underperforming the broader pan-European STOXX 600 subindex for carmakers and car parts manufacturers.
Summary of actions announced
- Increase working hours without raising salaries across development, sales, administration and production.
- Defer a special payment equal to 18.4% of one month’s salary from July to 2027.
- Relocate certain products and administrative functions to locations outside Germany.
These steps form the company’s stated approach to lower its cost per hour and respond to external cost pressures. The announcement highlights both internal workforce implications and broader industry challenges cited by the company.