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.
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.
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 executive board wrote that it was necessary to "continue to work flat out to reduce costs" in order to remain competitive on product prices. "Despite all our efforts, the situation in Germany today is dramatic," the letter stated.
Every new product launch and every assignment of tasks to German sites worsens Mercedes' relative cost position.
Mercedes has been struggling with setbacks 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."
