Wolff wants to drop a team.
The Austrian said the business of leasing engines was not "compelling and interesting" because the governing FIA had limited how much customers could be charged in order to help smaller teams.
The German manufacturer supplies McLaren, Aston Martin and Williams as well as the title-winning works outfit of seven-times world champion Lewis Hamilton and George Russell.
The engines are designed and made in Brixworth, central England.
Formula One teams are subject to a $140-million cost cap this season, which the bigger ones want expanded due to rising freight costs and inflation.
"In an ideal world, I would maybe see us (Mercedes) plus two (customer teams), so actually downsize a bit," said Wolff.