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Qabil Ashirov

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German automotive giant Mercedes-Benz has decided to suspend all new investments in its domestic production facilities, citing high manufacturing costs and a failure to reach an agreement with employee representatives on reducing labour expenses. The company is also considering closing two factories in Germany as part of its broader cost-cutting efforts.

According to Reuters, the decision was communicated to employees in an internal management statement circulated on November 12.

Michael Schiebe, Mercedes-Benz's head of production, said negotiations with the works council and trade union representatives had failed to produce an agreement on reducing operating costs. He described Germany's high production expenses as a growing challenge for the company's competitiveness.

The suspension of new investments follows several months of discussions between management and employee representatives. The automaker has been seeking ways to lower labour costs and improve the efficiency of its German operations.

The possibility of shutting down two domestic factories had already been raised in September. Schiebe warned at the time that closures could become necessary if sufficient progress on cost reductions was not achieved.

Britta Seeger, a member of the Mercedes-Benz management board, reiterated that closing production facilities remained an undesirable option. However, she acknowledged that the company now had to examine the possibility more seriously.

"We all want to avoid factory closures at all costs. Unfortunately, however, we now have to consider this option in greater detail," Seeger said in an internal communication to employees.

The latest decision highlights the pressure facing Germany's automotive industry as manufacturers grapple with elevated production costs and intensifying international competition.

Although Mercedes-Benz has suspended new investments in its German facilities, the company has yet to announce a final decision on closing any factories. The outcome will largely depend on whether management and employee representatives can reach an agreement on the proposed cost-saving measures.