Mercedes Stumbles

The Next German Auto Giant Is in Trouble

The protest at Mercedes-Benz is intended to be the kickoff for further actions across Germany.(Bild: AP/Thomas Kienzle)

For weeks now, one piece of bad news has followed another in the German auto industry: Now, automaker Mercedes-Benz is making headlines with a tightening of its cost-cutting measures—employees will have to work longer hours for the same pay in the future. Thousands of employees are therefore taking to the streets on Friday, arguing that they are “not to blame for the industry’s woes.”

Across the entire German auto industry, decisions by manufacturers and suppliers have recently made negative headlines. According to the union, 50,000 jobs were cut in the industry last year—and this trend could continue if the companies have their way. In addition to Mercedes-Benz, the Volkswagen Group also plans to make further cost cuts. According to a report in last week’s “Manager Magazin,” up to 100,000 jobs are to be cut there—saving billions—after net profit fell by nearly half in 2025.

“Dramatic Situation in Germany”
In a letter to employees in Germany at the end of last week, the Mercedes-Benz Executive Board stated that the company must “continue to work intensively to reduce costs” in order to remain competitive in terms of product prices.

“Despite all our efforts, the situation in Germany today is dramatic,” the letter stated. As reported by the “Handelsblatt,” the company has already reduced its workforce by 5,500 employees through voluntary severance packages between April 2025 and the end of March 2026 as part of its cost-cutting program. The company aims to achieve cost savings of five billion euros by 2027. 

Employees to Work More for the Same Salary
According to the letter, approximately 90,000 of the roughly 108,000 employees in Germany will not receive the expected special payment under the collective bargaining agreement in July as a short-term measure. This payment will be postponed until next year, the letter continued. This special payment is the annual “transformation bonus,” which amounts to 18.4 percent of regular monthly pay. According to the IG Metall website, this payment may be deferred or suspended in companies facing economic difficulties.

In addition, according to Mercedes-Benz, the cost per hour worked must be reduced. Management plans to negotiate with the works council in the coming weeks regarding an extension of working hours without wage compensation. According to the collective bargaining agreement, employees’ weekly working hours currently total 35 hours. Ergun Lümali, chairman of the general works council, has sharply criticized this move. He argues that management is attempting to roll back hard-won gains, which provides no basis for further talks. 

Protest Is Just the Start of Further“
 ” The German union IG Metall therefore called for rallies outside the factory gates on Friday. In Baden-Württemberg, around 20,000 employees took part in the protest. A company spokesperson, however, put the number of participants at 10,000. According to IG Metall, the protests at Mercedes-Benz are also set to take place in several German cities and mark the start of further nationwide actions.

Among other things, a motorcade of auto industry workers is planned for July 9 in the capital of Baden-Württemberg. “IG Metall and the workers at manufacturers and suppliers will give the auto industry’s executives a hot summer and fall as long as they continue to focus on job cuts and offshoring instead of seeking real solutions to the problems,” the union stated in advance, adding: “The workers are not to blame for this dire situation.” 

Employees at BMW and the VW subsidiary Audi, as well as the Bavarian chapter of IG Metall, are also backing the protests at Mercedes-Benz. Audi works council member Jörg Schlagbauer criticized: “At a time of slumping sales and global crises,” those in charge at Mercedes are trying “to seize the moment to shift the boundaries of collective bargaining and blackmail the workforce.” BMW General Works Council Chairman Martin Kimmich also states: “Anyone who can think of nothing better these days than to clamor for the 40-hour workweek has failed to recognize the signs of the times.”