Mercedes-Benz Operating Profits Drop More Than 50% in 2025

Mercedes-Benz reported a sharp decline in earnings for 2025, with operating profits falling by 57% to €5.8 billion, significantly below analysts’ expectations of €6.6 billion.

The German carmaker also recorded a 9% drop in turnover last year, reflecting mounting pressure from weak demand, global tariffs and currency effects.

A major factor behind the slump was a 19% decline in sales in China, the company’s largest single market. Nearly one in three Mercedes vehicles is sold in China, making the slowdown there particularly significant.

The company cited intense competition from Chinese manufacturers, global tariff pressures and unfavorable exchange rates as key reasons for the drop in profitability. The transition to electric vehicles has also proven more challenging than anticipated.

Chief Executive Ola Källenius said the financial results were in line with internal forecasts and pointed to a focus on efficiency and flexibility in a volatile market environment.

Mercedes-Benz expects an improvement in 2026, supported by planned cost reductions and new product launches. The company is targeting an adjusted return on sales of 5%, up from the current 3%.

However, profits have now declined for three consecutive years. The company’s shares are trading about 7% lower than at the start of the year.

To address the downturn, Mercedes has implemented a broad savings programme, stating that cost reductions of more than €3.5 billion at its passenger car division helped offset some external pressures.

In the medium term, the automaker aims to sell around 2 million vehicles annually and double electric vehicle sales. Still, the company faces ongoing challenges including supply chain disruptions, rising production costs and regulatory pressures.