Mercedes-Benz profit plunges 49% to €5.3bn as China slump, US tariffs bite

Mercedes-Benz on Wednesday reported its lowest annual profit since the Covid-19 pandemic, with net earnings falling nearly 49 per cent to €5.3 billion ($6.3 billion) in 2025, as US tariffs and intense competition in China weighed heavily on the German automaker.

Despite the steep decline, the figure slightly exceeded analysts’ expectations in a FactSet poll. Chief Executive Ola Källenius said the company had navigated a “dynamic market environment” and highlighted plans to launch more than 40 new models over the next three years.

“We are moving forward with a clear game plan and a very competitive product portfolio,” Källenius said.

Mercedes-Benz anticipates a similarly tough 2026, with revenue projected to remain around last year’s €132.2 billion. Core profit is expected to rise “significantly above” 2025 levels, aided by the absence of one-off restructuring costs. Still, profit margins in the core car business are forecast at three to five per cent, below last year’s five per cent.

Shares in the company opened down 4.5 per cent in Frankfurt, making it the worst performer on Germany’s DAX index.

Founded in 1885 with Carl Benz’s invention of the first motor car, Mercedes has been hit by multiple pressures: US tariffs on foreign automakers, a slowdown in China, sluggish European demand, and heavy spending on electric vehicles amid patchy uptake.

“The auto industry and our company, we’re in a once-in-a-hundred-year transformation,” Källenius said. “It’s happening in an environment that is more dynamic than we have experienced in many, many years.”

China, the world’s largest car market, proved particularly challenging. Competition from local manufacturers like BYD and Geely, coupled with a brutal price war, contributed to a 19 per cent fall in Mercedes sales in China – the lowest since 2016 –  and a 10 per cent drop in global sales.

Chief Financial Officer Harald Wilhelm warned that sales in China are expected to decline further despite upcoming launches.

“In that very dynamic environment, in China, we retain a more cautious view,” Wilhelm said. “We expect sales to be lower.”