Mercedes-Benz to Negotiate New Cost-Cutting Measures with German Unions Amid Market Pressure

Mercedes-Benz Group plans to enter formal negotiations with German labor unions on additional measures aimed at cutting costs and enhancing competitiveness. The proposed measures would run parallel to the current collective labor agreement, which remains valid until 2034. This agreement includes the "Future Security Agreement" (ZuSi), which prohibits compulsory layoffs at Mercedes-Benz’s vehicle plants in Germany. Currently, the company adjusts its workforce solely through natural attrition and voluntary departures. The talks come amid dual pressures: new U.S. tariffs on imported vehicles and persistently declining sales in China. Mercedes-Benz is conducting a comprehensive review of its cost structure to mitigate the impact of these challenges. Britta Seeger, Member of the Board of Management for Human Resources, stated that the company needs to assess whether all feasible steps have already been taken in Germany to maintain industrial competitiveness. To improve profit margins, Mercedes-Benz is rolling out artificial intelligence (AI) across its entire business to boost productivity and reduce expenses. Since tracking AI adoption began approximately 18 months ago, the share of employees using AI in their daily work has risen from 30% to 60%, with a target of reaching 70% by year-end. Some business units have already achieved full daily AI usage among staff. Although the automotive division’s operating margin declined to 4.1% in the first quarter of this year from 7.3% a year earlier, the drop was less severe than market expectations, and overall profitability remains within the mid-range of the company’s annual guidance. Mercedes-Benz anticipates a gradual improvement in performance in the second half of the year, supported by new model launches and existing order backlogs.