On 3 July, tens of thousands of Mercedes-Benz workers across Germany walked off the job to protest a sweeping savings plan. The company wants to eliminate annual bonuses for roughly 90,000 employees, extend the standard working week from 35 to 40 hours without a pay increase, and curb mobile-work arrangements. IG Metall, the country’s most powerful industrial union, said more than 33,000 took part in demonstrations at plants from Sindelfingen to Düsseldorf; the company put the figure at around 16,000. In Baden-Württemberg, protesters chanted for the removal of chief executive Ola Källenius.

The confrontation flows from the brutal arithmetic now reshaping the entire sector. German carmakers face a triple margin shock: collapsing sales in China, competition from state-backed Chinese electric-vehicle brands on their home continent, and US import tariffs. At Mercedes, operating profit fell 17 per cent in the first quarter of 2026, after halving the previous year. At Volkswagen, where net income dropped 44 per cent in 2025, management is preparing a plan that would double previously announced reductions to 100,000 jobs worldwide and shut four domestic sites—Hanover, Zwickau, Emden and Audi’s Neckarsulm plant—if the supervisory board approves it on 9 July.

Viewed from Stuttgart and Wolfsburg, the executive boards view the restructuring as unavoidable. Mercedes told staff that “structural costs in Germany, particularly labour costs, are not competitive by international standards”. Its management framed the longer-hours demand as the “most direct and fairest way” to lower the cost per hour worked. Unions and works councils reject that logic. Ergun Lümali, chairman of the Mercedes general works council, called the measures “an attack on the welfare state itself”. The federal government in Berlin has said its goal is to protect jobs. At Volkswagen, the so-called VW Law gives the state of Lower Saxony, which holds 20 per cent of voting shares, an effective veto over factory closures.

The protests at Mercedes are only a first wave; IG Metall has signalled that action will spread to Volkswagen and its suppliers. The immediate test is the VW supervisory board session on 9 July. More broadly, the auto industry’s retrenchment is part of a global wave: corporate announcements in the first half of 2026 totalled roughly 430,000 job cuts, with the automotive sector accounting for around 128,000 of them. The Wolfsburg board decision will determine whether that figure rises sharply overnight.