The key facts

  • Mercedes-Benz has halted all further investments in its German sites
  • The company is considering closing plants; it had previously mentioned the possible need to close two plants
  • US tariffs cost Mercedes about €1 billion in profit last year; sales in China fell by roughly 19% in 2025

Investment freeze and threat of plant closures

Mercedes-Benz has announced a suspension of all further investments in its German sites for the time being. According to Deutsche Welle, the decision was announced by board member Michael Schiebe in a memo posted on the company's internal network. The same document notes that the automaker is weighing the possibility of closing plants. “The board has jointly decided to halt all further investments in German sites”, Schiebe is quoted as saying.

Union pressure and management's arguments

The announcement came amid growing pressure from the works council and the IG Metall union. Board member Britta Seeger said the company “is forced to examine specifically and in detail which sites in Germany we can still afford to keep.” According to her, everyone wants to avoid plant closures at all costs, “however, unfortunately, we now have to work through this option more concretely.” Schiebe, who holds the position of production chief, explained that with the current cost structure, investing in Germany is impossible: labor costs are sometimes five times higher than at plants in Eastern Europe, where administrative overhead is also lower. He previously stated that two plants in Germany would have to be closed if costs are not reduced.

Why the company found itself in crisis

One of Germany's largest and best-known brands has been facing declining sales and profits in recent years. China — Mercedes' largest single market, which historically accounted for about a third of passenger car sales — has seen a marked drop in demand, especially for foreign luxury brands: in 2025, the company's sales in China fell by roughly 19%. Investments in electric vehicles have not paid off as quickly as expected: demand for EVs in Europe and North America turned out to be lower than forecast, while competition was intensified by cheaper electric cars from China. An additional blow came from the increased US tariffs under President Donald Trump — according to the company itself, they alone cost it about €1 billion in profit last year. Similar problems are being experienced by other leading German automakers — Volkswagen, BMW, Audi and Porsche — as well as a number of European manufacturers.