Mercedes-Benz reported a net profit of €5.3 billion ($6.3 billion) for 2025, a 49% decline from the previous year and the lowest annual result since the Covid-19 pandemic. The figure, however, exceeded analyst expectations.
The sharp drop reflects significant headwinds, including US tariffs on foreign automobiles and intense price competition in China, the world’s largest car market. Overall revenue matched 2024’s level at €132.2 billion, but the company’s core automotive margin fell to 5%, with a forecast of 3-5% for 2026.
“Amid a dynamic market environment, our financial results remained within our guidance,” said CEO Ola Källenius, citing over 40 new model launches planned for the next three years. He described the industry shift as “a once-in-a-hundred years transformation” occurring in a highly volatile climate.
The financial results sent Mercedes-Benz shares down 4.5% in Frankfurt, making it the worst performer on Germany’s DAX index. The company anticipates a similarly challenging 2026, projecting core profit to be “significantly above” the 2025 level, primarily due to the absence of one-off restructuring costs.
The erosion of profitability is closely tied to worsening conditions in China, where Mercedes’ sales volume plummeted 19% last year to its lowest since 2016. This decline contributed to a 10% drop in global sales. CFO Harald Wilhelm confirmed a cautious outlook for the region, stating, “We expect sales to be lower,” despite planned new product launches. The Chinese market has become a fierce battleground due to a brutal price war and rising competition from domestic manufacturers such as BYD and Geely.
The company also faces pressure from stagnant demand in Europe and substantial investment requirements for electric vehicles, even as consumer adoption remains uneven. These factors compound the impact of US trade policies implemented under President Donald Trump, which imposed tariffs on imported vehicles.
Looking ahead, Mercedes-Benz is banking on its extensive model offensive and cost management to navigate what it describes as an exceptionally turbulent period for the global auto industry. The 2025 results underscore the scale of the challenge as traditional premium manufacturers confront technological disruption and geopolitical trade barriers.
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