Mercedes-Benz Revives the V8 to Offset China's Hit While Workers Push Back on Austerity
Published on 06/30/2026 at 18:07 | Redaktion boerse-global.de
A 100-year legacy offers little cushion when a company faces a pincer movement from its own workforce and its largest market simultaneously. Mercedes-Benz this week marked its centenary with the stock plumbing a 52-week low, a quarter of its Chinese sales gone, and thousands of workers walking off the job in protest over management’s cost-cutting drive.
Tensions boiled over on Friday, June 27, when employees at the Bremen plant downed tools before the end of their shift, temporarily halting production in several areas. The trigger was a double-barrelled austerity package: management wants to postpone a contractual one-off payment — the so-called Transformationsbaustein, worth nearly a fifth of a monthly salary — from July 2026 to 2027, and to open talks on extending the 35-hour working week without extra pay. The group works council condemned the deferral as a unilateral move and flatly rejected longer hours for no additional compensation. Around 90,000 of the company’s roughly 108,000 German staff are affected by the bonus delay.
The labour conflict is the flipside of a broader margin squeeze that has forced a strategic about?turn under the bonnet. With wealthy buyers increasingly reluctant to switch to electric powertrains, Mercedes is bringing back V8 combustion engines for its luxury models — a move designed to protect profitability while the group pursues a more selective approach to electrification. The reasoning is straightforward: the most profitable models must compensate for the deepening slide in China, where first?quarter deliveries collapsed by a quarter. Outside China, however, global sales actually rose 5%.
Should investors sell immediately? Or is it worth buying Mercedes-Benz?
Those regional divergences are hammering the bottom line. First?quarter operating profit fell 17% year on year to €1.9 billion, while the automotive margin shrank to just 4.1%. Revenue for the period came in at €31.6 billion. The pain is not new: full?year 2025 net profit was nearly halved to €5.3 billion. Management insists that without meaningful cost reductions, competitiveness is at risk — especially given that developing new EV platforms in Germany costs up to four times as much as it does for Chinese rivals.
The stock market has taken a dim view. Shares touched a new 52?week low of €42.64 on Monday, before rebounding slightly to €43.87 the following day. Year to date, the equity has shed almost 29% of its value. The relative strength index now sits at 33.4, hovering near oversold territory. The 50?day moving average is roughly 10% above the current price, underscoring the severity of the sell?off.
Analysts are split on the outlook. Jefferies recently upgraded the stock from “Hold” to “Buy”, though it trimmed its price target from €60 to €52. UBS maintains a “Neutral” rating with a €55 target, interpreting the cost measures as evidence of the structural overhaul underway across German carmaking. The consensus price target among analysts tracked by the primary article stands at €61.20, implying a potential upside of roughly 40% — but that optimism hinges on the V8?led luxury push delivering enough cash to offset China’s weakness through the second half of 2026.
All eyes now turn to July 28, when Mercedes reports second?quarter earnings. The results will reveal whether the margin?repair plan is gaining traction — or whether a workforce in open revolt will slow the turnaround before it can gather speed.
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