Mercedes-Benz Confronts Internal EV Backlash and Union Rift as Hungary Expansion Gathers Pace
Published on 07/18/2026 at 16:43 | Redaktion boerse-global.de
A manager at Mercedes-Benz has reportedly described the company’s electric AMG GT with four doors as a model that "should not exist", according to a report in Manager Magazin. The criticism, attributed to an unnamed executive, extends to the broader electric-vehicle programme: the AMG EV development cost around €1 billion, while the EQS and EQE SUV lines swallowed roughly €5 billion. One manager is said to have called them "the biggest failures in the company’s history". The admissions come at a time when the Stuttgart-based automaker is simultaneously pushing its German workforce to accept longer hours without extra pay and investing €1 billion to turn its Hungarian plant into its largest production hub.
The internal soul-searching over the EV portfolio is set against a backdrop of deteriorating financial performance. In the first quarter of 2026, Mercedes-Benz saw revenue slip 5% to €31.6 billion, while operating profit (EBIT) fell 16.8% to €1.9 billion. The weakness is not isolated: according to a study by the Center Automotive Management, 14 of the world’s 20 largest automakers posted lower sales in the first half of 2026, with an average decline of 2.8%. Mercedes and BMW both undershot that mark, while Volkswagen slid 6.5% and Toyota dropped 3.1%. BMW has already trimmed its core margin forecast from 4–6% to just 1–3%, and its first-half deliveries fell 4.2% to 1.15 million vehicles.
Management’s response has been a two-pronged strategy that has inflamed tensions at home. CEO Ola Källenius is demanding a 40-hour working week in Germany with no increase in pay – a proposal the IG Metall union has sharply condemned. At the same time, the €1 billion investment over four years in Kecskemét, Hungary, where the plant already employs around 4,500 people, signals a clear shift of capacity towards lower-cost Eastern Europe. The IG Metall has decried the move as a drain on German employment and value creation, a criticism echoed by a German brand blog that, according to Hungarian outlet Világgazdaság, argued the offshoring harms the brand’s equity. BMW opened a new factory in Debrecen, Hungary, in September 2025, underscoring the industry-wide trend.
Should investors sell immediately? Or is it worth buying Mercedes-Benz?
Despite the profit squeeze, Mercedes-Benz is maintaining a generous dividend. Analysis from EY shows the group is paying out €4.1 billion for the past fiscal year, placing it among the three largest DAX distributors alongside Allianz (€6 billion) and Deutsche Telekom (€4.4 billion). Total DAX payouts reached €54 billion, nearly unchanged from the prior year even though aggregate net profit for the index fell by roughly 20%. Within the automotive sector, however, Mercedes, BMW and Volkswagen all cut their dividends.
Investors have already delivered their verdict. The Mercedes-Benz stock closed on Friday at €45.51, down 0.67% on the day and 24.24% lower since the start of 2026. That leaves the shares nearly 27% below the 52-week high of €62.30 set in mid-December 2025 – a measure of how deeply the market has priced in the combination of thinning margins, costly capacity relocations, unresolved labour disputes and internal doubt about the EV roadmap.
Beyond the immediate challenges, Mercedes-Benz is pressing ahead with projects in other regions. In Indonesia, it continues to assemble the S-Class and E-Class at the Wanaherang plant near Bogor, a facility that has been operating since the 1970s. For the US market, the company plans to enter the luxury-van segment from 2028 with the VLE, VLS and VLS Maybach models; the VLE is expected to carry a price tag of roughly $130,000. Its Brazilian subsidiary, meanwhile, received a Gold seal under the GHG Protocol for its carbon accounting for the fourth consecutive year. Yet these overseas initiatives do little to resolve the core tension playing out in Germany and Hungary, where the costs of yesterday’s EV bets are colliding with today’s demands on the factory floor.
Ad
Mercedes-Benz Stock: New Analysis - 18 July
Fresh Mercedes-Benz information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.
Disclaimer regarding our articles: No investment advice, no buy or sell recommendation. Information on prices, companies, and markets is provided without guarantee; changes are possible at any time. Stock market transactions can lead to substantial losses. Our articles are created and reviewed in whole or in part automatically with the support of AI.
