On Monday, September 21, 2026, Mercedes-Benz production chief Michael Schiebe addressed workers at the Sindelfingen plant near Stuttgart. He reiterated the company’s “clear goal is to maintain all of our German locations” but added a stark warning: “If we are unable to do this, we will have to close one German assembly plant and one German powertrain plant.” The statement came as part of a broader “productivity campaign for Germany” aimed at curbing operating costs that have surged in recent years.
Mercedes operates three vehicle assembly sites in Germany – Sindelfingen, Rastatt and Bremen – and seven powertrain facilities spread across Untertürkheim, Affalterbach, Berlin, Hamburg, Kamenz, Kölleda and Arnstadt. Schiebe did not specify which body shop or powertrain plant might be targeted, leaving employees and the public to wonder which location could face shutdown.
Union backlash and nationwide protests
IG Metall, Germany’s largest industrial union, reacted swiftly. In a statement the union declared, “Threatening plant closures is no way to shape the future.” It warned that any attempt to pressure workers with an “concessions or plant closures” ultimatum would meet “determined resistance” and a “clear ‘not on our watch’” response. The union’s rhetoric reflects the scale of the mobilisation: roughly 175,000 workers participated in rallies at 280 sites across the country, including key automotive hubs such as Stuttgart, Wolfsburg, Ingolstadt and Munich.
Protesters gathered outside the Sindelfingen facility, chanting and holding signs demanding a negotiated solution rather than threats. The demonstrations highlighted the broader tension between German manufacturers and labour, especially after Mercedes published an open letter proposing longer working hours without extra pay as part of its cost-cutting agenda.
External pressures: Chinese competition and tariff hits
Mercedes’s cost dilemma is compounded by fierce competition from Chinese automakers. Brands such as BYD, Geely, GAC and Changan have accelerated their European penetration, offering models that undercut traditional German pricing. In the second quarter of 2026, Mercedes sales in China fell by 30%, prompting an $800 million impairment charge for the market.
Adding to the squeeze, U.S. tariffs imposed on German exports cost the automaker more than $1.1 billion in 2025 alone. The financial hit underscores why the board is desperate for a productivity boost. The pressure mirrors recent news that Volkswagen is evaluating the closure of four German plants between 2031 and 2034, signalling a broader industry shift as legacy manufacturers scramble to stay competitive.
While Mercedes seeks to preserve its German footprint, the combination of rising Chinese market share, hefty tariff burdens and internal labour disputes creates a perfect storm. The outcome of the ongoing negotiations with IG Metall will determine whether the company can avert the closure of a body shop and a powertrain facility, or whether it will join Volkswagen in trimming its domestic production network.
