Mercedes-Benz has suspended all further investment in its German production sites amid rising costs and declining profitability, while warning that plant closures are now being considered more seriously.

Axar.az reports, citing German media, that the decision was announced by production chief Michael Schiebe in an internal interview on November 12. Human resources chief Britta Seeger said the company was reviewing which locations it could still afford to operate, adding that it would seek to avoid closures where possible.

The dispute centres on labour costs. Management is seeking to increase the working week from 35 to 40 hours without additional pay, while also considering cuts to holiday and Christmas bonuses and annual performance-related payments.

Mercedes says production costs in Germany are significantly higher than in Eastern Europe. The company is also facing growing pressure from weaker sales in China and declining margins. It sold around 407,000 passenger cars in the third quarter, nearly 8% fewer than a year earlier.

The automaker has not identified which sites could be affected. Its German passenger-car assembly plants are located in Sindelfingen, Rastatt and Bremen, while engine and component production takes place at several other locations.