Mercedes-Benz Slashes Outlook as Profit Falls, Tariff Uncertainty Looms

Mercedes-Benz reported a sharp drop in first-quarter profit on Wednesday and warned that rising global trade tensions, particularly US tariff threats, had cast serious doubt on its outlook for the rest of the year.

The German luxury automaker said net profit fell nearly 43% year-on-year to €1.73 billion ($1.93 billion), citing sluggish demand in China and broader geopolitical headwinds.

Group earnings before interest and tax (EBIT) dropped to €2.29 billion, missing analyst estimates by around 15%, according to data from FactSet.

Finance chief Harald Wilhelm said that despite the challenges, the company remains anchored by its premium vehicle lineup and robust balance sheet. “This provides a solid foundation to navigate our company through a period of geopolitical uncertainties,” he said.

However, the company has withdrawn its financial guidance for 2025, citing “volatility with regard to tariff policies” — a reference to growing protectionist measures, particularly from the United States.

Revenue declined 7.4% globally, with sales plunging nearly 25% in China amid intensifying competition from domestic electric vehicle makers like BYD. In the United States, which accounts for about a quarter of Mercedes-Benz’s revenue, sales dropped 4.4%.

The company warned that if current and proposed tariffs — including a potential 25% levy on car imports under US President Donald Trump’s trade agenda — remain in force throughout the year, “material impacts” on performance are likely.