Mercedes tells employees to work longer hours without extra pay, delays 18.4% bonus

Mercedes-Benz has asked employees to work longer hours for the same salary as part of a broader cost-cutting programme aimed at improving efficiency across the business. The measures, outlined in a note to employees seen by Reuters, also include delaying a special bonus payment and relocating some administrative functions overseas.

The move comes as European automakers face mounting pressure from rising production costs, geopolitical tensions and higher US import tariffs.

Company seeks lower labour costs

According to the internal note cited by Reuters, Mercedes-Benz CEO Olaf Källenius and other senior executives told employees the company must reduce its labour costs by increasing productivity.

The note said: "The cost per hour must decrease. In development, sales, administration and production, we should work more for the same pay in all areas."

The proposal forms part of a wider effort to improve cost competitiveness across the organisation.

Multiple cost-saving measures announced

The company has outlined several initiatives designed to lower operating costs. The measures include:

• Longer working hours without additional pay.
• A special payment worth 18.4% of one month's salary, originally due in July, will now be postponed until 2027.
• Relocation of selected products and administrative functions to locations outside Germany.

Mercedes has not announced changes to employee salaries alongside the proposed increase in working hours.

Employee representatives push back

The company's works council criticised the proposals, saying employees were being asked to shoulder the burden of challenges they did not create.

According to Reuters, the council said the company's current difficulties do not stem from its workforce, yet employees are expected to bear the consequences through tougher employment conditions.

The comments highlight growing tensions between management and employee representatives as manufacturers seek to improve profitability in a difficult market.

Industry faces mounting pressure

The latest measures reflect broader challenges confronting Europe's automotive sector.

The ongoing conflict in the Middle East has increased costs across global supply chains, adding further pressure on manufacturers already dealing with higher US import tariffs.

The difficult operating environment has also weighed on investor sentiment.

Mercedes-Benz shares have fallen by more than 25% since the start of the year, underperforming the broader STOXX 600 Automobiles & Parts Index.

Efficiency drive gathers pace

Mercedes has been pursuing cost reductions as the automotive industry navigates slowing demand, rising geopolitical uncertainty and increasing competitive pressure.

The latest proposals indicate the company is looking beyond traditional cost controls by focusing on labour productivity, compensation timing and operational restructuring. Whether the measures proceed as planned is likely to depend on discussions with employee representatives in the coming months.

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