Mercedes CEO Eckhard Cordes ordered a production cut to 400,000 units at the automaker's plant in Sindelfingen, Germany.
The move follows slow sales of the brand's E- and S-class vehicles. Dealers say sales of the two models are "disappointing."
Sindelfingen produced more than 2,000 cars a day last year, Automobilwoche was told.
Of those, 1,050 were E-class and CLS models, 650 were C-class vehicles and 300 were S- and CL-class models.
Uwe Meinhardt, an official from the German metalworkers' union IG Metall, said Mercedes originally planned to build about 500,000 cars at Sindelfingen in 2005.
Sindelfingen has 31,300 employees.