The Stuttgart automaker finds itself confronting twin pressures that are sharpening the focus on its cost structure. Martin Brudermüller, chairman of the supervisory board, has ignited a debate by calling for a return to the 40-hour working week — a significant departure from the 35-hour norm enshrined in German wage agreements. The proposal comes as the company simultaneously pushes formal talks with worker representatives on additional savings measures, seeking cuts that would operate alongside the existing collective bargaining framework.
That framework includes a no-compulsory-redundancy guarantee at German vehicle plants running through 2034, a contract that management is not trying to dismantle but is attempting to work around. The strategy is partly driven by the numbers: Mercedes-Benz’s operating margin in its automotive business dropped to 4.1% in the first quarter, roughly half the 7.3% recorded a year earlier. While the result beat analysts’ expectations and still sits within the mid-range of the full-year guidance, the direction of travel is unmistakable.
Stock trading with little buffer
The market’s reaction has been unforgiving. Shares slipped 0.78% on Tuesday to €45.23, and have since edged slightly lower to €45.08. That leaves the stock less than 3% above the 52-week low of €43.99, a level touched on 18 June. The year-to-date decline stands at roughly 27%, with the equity trading well below both its 50-day moving average of €49.63 and its 200-day average of €55.17.
Technical indicators underscore the weakness: the relative strength index sits at 33.9, a zone typically viewed as oversold. That has historically attracted some bargain hunters, though the broader narrative around margins and labour costs continues to weigh.
Two worlds collide on productivity
The call for a longer working week is not a sudden development. Brudermüller’s remarks, reported by dpa, are widely seen as an opening salvo ahead of the next round of collective bargaining for the metal and electrical industries, scheduled for autumn 2026. The powerful IG Metall union only secured a 3.1% pay rise in April, and has shown little appetite for flexing on working time.
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Under current rules, any shift to 40 hours would require individual agreement under the Pforzheim Accord, which allows temporary deviations in economic emergencies. But the hurdles are steep: clear conditions, works council approval, and — critically — the union’s buy-in. Without that, the proposal remains a political signal rather than a near-term policy change.
Mercedes-Benz’s own operational reality gives the debate urgency. HR chief Britta Seeger has stated that every viable cost-cutting step in Germany must be examined. The company is leaning heavily on efficiency gains elsewhere, particularly through artificial intelligence. Eighteen months ago, only 30% of employees used AI tools in their daily work; today that figure has doubled to 60%, with a target of 70% by year-end. Management hopes that higher productivity from AI — combined with a leaner cost base — can offset the need for broader job cuts.
Recovery hopes rest on new model launches
Despite the current headwinds, the company is banking on a gradual improvement in the second half of the year, supported by fresh models and existing order books. Whether that is sufficient depends on how quickly the sparring with labour representatives produces concrete results.
The stock market has already priced in a dim view of profitability, and the lingering question over whether Mercedes-Benz can restructure costs without triggering a full-blown confrontation with its unions means the share price is likely to remain tethered to developments inside German boardrooms as much as to global auto demand.
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