The talks occur amid challenges from American tariffs and an extended drop in Chinese sales for the premium automaker.

Mercedes-Benz is set to open formal discussions with union officials on additional cost-cutting and competitiveness steps as the German manufacturer ramps up artificial intelligence deployment to enhance output.

Human resources head Britta Seeger confirmed the talks, which will proceed in parallel with current labour pacts known as ZuSi that extend to 2034 and bar forced layoffs at German plants.

The discussions arise as the firm contends with US tariffs alongside a sustained sales slump in China.

China faces softer buyer sentiment, a real estate downturn, and rising rivalry from local electric vehicle producers, all of which have dampened luxury car demand.

At the Stuttgart headquarters, Seeger noted the need to assess whether Mercedes and Germany have taken all possible steps to compete effectively with rivals and ensure the country remains attractive for business.

Headcount reductions so far have relied solely on natural turnover and voluntary exits.

The company posted a vehicle production margin of 4.1 percent in the opening quarter, down from 7.3 percent the prior year.

On artificial intelligence, Seeger reported that roughly 60 percent of staff now apply the tools daily, up from 30 percent when tracking began about 18 months earlier.

The target is 70 percent adoption by year end, with AI positioned as a means to reshape workflows rather than primarily trim staff numbers.

Mercedes-Benz follows other German automakers in reassessing expenses, as Volkswagen seeks deeper savings beyond its plan to eliminate around 50,000 positions by decade end and BMW warns its margin may fall to 1 percent this year while outlining further economies.

The firm anticipates a firmer second half supported by fresh model introductions and steady orders, with gains expected in coming months.