Hit hard by high costs and sluggish sales… Mercedes-Benz considers closing German plants and halts global investments, including in Korea

*This content was translated by AI.View Original

The German automotive industry, which long prided itself as the “birthplace of the automobile,” is on the brink of collapse after being hit hard by a high-cost structure and a global market downturn. In this context, Mercedes-Benz has taken an extreme measure: in addition to considering the closure of plants in its home country and suspending investments, it has put all new investments in global markets, including Korea, on hold.

According to local media such as the German business daily Handelsblatt and industry sources, Mercedes-Benz management recently issued an official declaration via an internal intranet notice that all new investments in Germany would be temporarily suspended. Alongside this, the possibility of closing at least two facilities — one complete vehicle assembly plant and one powertrain parts plant — has also been placed on the concrete review agenda. This decision stems from the judgment that the company can no longer sustain a high-cost structure in which domestic production labor costs are up to five times higher than those at overseas bases such as Eastern Europe, after months of negotiations with the labor union (IG Metall) over wages and productivity have reached an impasse.

Amid a rigid labor environment characterized by a 35-hour workweek and various allowances, compounding adverse factors — including a sharp drop in sales in its largest market, China (a 29% decline in shipments within China), and U.S. tariff barriers — have pushed Mercedes-Benz into a company-wide austerity management mode. The ripple effects are already hitting the domestic market immediately. As Mercedes-Benz headquarters applies a global cost-cutting and investment-efficiency policy across the board, it has been confirmed that major planned new infrastructure development and related project investments in the Korean market have also been fully halted or indefinitely postponed.

With Mercedes-Benz following Volkswagen in locking down its domestic production lines and tightening the valve on global investment, concerns over the hollowing out of Germany’s automotive industry — the heart of European manufacturing — are reaching their peak, while massive ripples are also spreading across the domestic imported car market and the broader ecosystem.

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*This content was translated by AI.View Original