German car manufacturer Mercedes-Benz is tightening its cost-cutting measures, with the DAX-listed group postponing a special payment under the collective agreement, originally scheduled for July, until next year.
This is according to a letter to employees in Germany, a copy of which was seen by dpa on Friday.
According to the letter, as an immediate measure, around 90,000 of the approximately 108,000 employees will not receive a special payment under the collective agreement in July, as expected, instead this will be postponed until next year.
The total amount involved was initially unclear. The special payment in question is the annual "transformation component," which amounts to 18.4% of the regular individual monthly salary.
According to the IG Metall website, in companies facing economic crises, the special payment may be postponed or suspended. When asked, a Mercedes spokesman did not disclose how much the DAX-listed group would save as a result.
The company stated that structural costs in Germany - particularly labour costs - are not competitive by international standards.
At the same time, management intends to discuss an extension of working hours without wage compensation with the works council in the coming weeks, the company added. Under the collective agreement, employees currently work 35 hours a week.
Executive board: Situation dramatic
In the letter, the Stuttgart-based company's executive board cited "three massive challenges."
In addition to global restrictions on free trade and the Chinese market, the letter stated that Germany as a business location had lost a great deal of its competitiveness. Mercedes must therefore take action.
"The success of our product offensive risks coming to nothing if excessive costs eat into profits," the letter stated. Despite all efforts, the situation in Germany today is dramatic. Every new product award and every allocation of tasks to German sites worsens the relative cost position, it said.
"At Mercedes-Benz, we will radically accelerate processes and streamline established structures," the statement continued. The cost per working hour must be reduced. "The most direct and, in our view, fairest way is for us to work more for the same pay across all areas," said the executive board.
Discussions would be held with employee representatives over the coming weeks and months on how to secure the company's long-term viability in Germany.
Works council takes critical view of move on working hours
The general works council described the postponement of the special payment as "a unilateral decision by the company." It argued that the causes of the current challenges did not lie with the employees, yet once again the employees were expected to bear a significant share of the burden.
The council said it also took a critical view of the debate that has been sparked over longer working hours for the same pay, it added. Particularly against the backdrop of, in some cases, lower capacity utilization at the German sites, this is not a convincing plan for the future.
"Anyone who defines competitiveness primarily in terms of unpaid longer working hours is taking the easy way out," wrote the general works council.
Just a few days ago, Mercedes supervisory board chairman Martin Brudermüller told the Handelsblatt business newspaper that a return to the 40-hour week should be seriously considered. In the German car industry, the 35-hour week is standard for companies bound by collective agreements - including at Mercedes-Benz. It is not a legal requirement.
Plummeting profits and a cost-cutting programme
Mercedes has been struggling for some time. In the first quarter of this year, consolidated profit fell by 17.2%. In 2025, profit had slumped by just under half, from €10.4 billion ($11.9 billion) to €5.3 billion, following a downturn in 2024.
Tariffs, adverse exchange rate effects and intense competition in China were cited as factors weighing on the results. Sales volumes and turnover also declined.
The carmaker based in the south-western city of Stuttgart responded by launching a cost-cutting programme just over a year ago, which Mercedes referred to as a performance-enhancement programme, or "next level performance."
