A lot of automakers today are under intense pressure from two different sides and hemorrhaging cash as a result. On the one hand, US import tariffs are really doing a number on countless brands which had thus far relied heavily on American buyers. And then you’ve got China flooding places like Europe with cheap cars, undercutting legacy manufacturers by a wide margin and expanding its market share at an alarming rate.
These factors combined are causing a world of trouble, especially for Volkswagen and its many subsidiaries. But VW Group is by no means the only one feeling the squeeze, even if it does seem to make headlines far more often than other German carmakers. And now it’s time for Mercedes-Benz to get some attention for the wrong reasons.
Two German Plants Risk Closure Unless Market Conditions Improve
A photo of the Mercedes-Benz G-Class on Magna Steyr’s assembly line.Magna International/X
On September 22, Mercedes production chief Michael Schiebe met with workers at the company’s manufacturing facility in Sindelfingen, Germany. Employees were told the automaker wishes to keep all German plants up and running, but “framework conditions that boost productivity” are needed in order to make it happen. In essence, this translates to reduced costs, although it’s not entirely clear how Mercedes hopes to get there.
The consequences of failing to accomplish this would be dire according to Schiebe, who spoke of two factories having to close their doors in that scenario. “If we are unable to do this, we will have to close one German assembly plant and one German powertrain plant,” he said, without detailing which facilities these might be.
So, Is It Now Time For Mercedes Employees To Panic?
Mercedes-Benz CLA-Class Production Start Rastatt FactoryMercedes-Benz
Of course, the news is a great cause for concern among German workers employed by Mercedes, and all the uncertainty surrounding their predicament doesn’t make things any better. On the contrary, it only exacerbates people’s anxiety over their jobs potentially ending up on the chopping block.
And these fears are justified given the current automotive landscape, at least until a clear plan of action is put in place to avoid a worst-case scenario. For now, though, no such roadmap is known to exist, so we can’t be sure what steps Mercedes will be taking to alleviate these pressures and prevent mass layoffs.
CarBuzz Insight – Why This Matters:
It goes without saying that traditional car brands are in the midst of what you might call a perfect storm, with everything seemingly turned against them and no end in sight. This is especially true for European automakers, as indicated by the long string of bad news we’ve been reporting on since it all started. But how much worse can things get before they get better?
Well, although we hate to say this, the worst might be yet to come and rock bottom is still a long way down, so only the most optimistic among us will dare to hope for meaningful improvements in the near future. But for the sake of its workforce, our fingers are crossed for Mercedes-Benz to find a way of navigating its problems without the need for drastic measures.
Source: Automotive News
