Mercedes-Benz Asked Employees to Work Longer Hours for Same Pay

German luxury carmaker Mercedes-Benz has unveiled a new round of cost-cutting measures, asking employees to work longer hours without additional pay as it looks to reduce expenses and improve competitiveness in a challenging global automotive market.

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In an internal note sent to employees on Friday, CEO Olaf Källenius and other senior executives said the company must lower its labour costs across all business functions.

“The cost per hour must decrease—in development, sales, administration and production. We should work more for the same pay in all areas,” the management said in the note.

Key Cost-Cutting Measures

Mercedes-Benz announced several steps aimed at reducing operating costs:

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• Employees will be expected to work longer hours without additional pay.
• A special payment worth 18.4% of one month’s salary, originally due in July, has been postponed until 2027.
• Some product operations and administrative functions will be relocated to overseas locations to lower costs.
• The company plans to improve efficiency across development, production, sales and administrative teams.

The automaker did not disclose which operations would be moved abroad or the countries where they would be relocated.

Employees Push Back

Mercedes-Benz’s works council criticized the proposals, saying employees are being asked to bear the burden of problems they did not create.

Also Read: General Motors Replaces 1,000 Workers with 50 Robots

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According to employee representatives, the company’s current challenges stem from external economic and geopolitical pressures rather than workforce performance.

Industry Under Pressure

European automakers continue to face multiple headwinds, including rising manufacturing costs, weaker demand and global trade tensions.

Among the major challenges are:

• Rising industry costs linked to the ongoing conflict in the Middle East.
• Higher U.S. import tariffs affecting European vehicle exports.
• Increased pressure to improve profitability while investing in electric vehicles and new technologies.

The financial strain has also been reflected in Mercedes-Benz’s stock performance. The company’s shares have fallen by more than 25% year-to-date, underperforming the broader STOXX 600 Automobiles & Parts Index.

The latest measures underscore the growing pressure on global automakers to cut costs while navigating economic uncertainty, geopolitical tensions and an increasingly competitive automotive landscape.

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