Luxury Figures
Mercedes-Benz: Downturn in China Cause Automobile Profit to Plunge by 51%
By Eva Morletto28 octobre 2026
Hit by falling sales in China and the costs associated with renewing its model ranges, Mercedes-Benz has seen its adjusted automotive operating profit fall by 51 per cent in the third quarter. The manufacturer is banking on electrification and cost-cutting to restore its margins, whilst lowering its financial targets for 2026.
The slowdown in the Chinese market continues to weigh heavily on Mercedes-Benz’s performance. According to results published this morning, the Stuttgart-based manufacturer recorded an adjusted operating profit (EBIT, earnings before interest and tax) of €560 million for its automotive division, compared with €1.14 billion a year earlier, representing a 51 per cent fall. Its adjusted operating margin now stands at 2.5 per cent, compared with 4.8 per cent in the third quarter of 2025.
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The group’s turnover, meanwhile, fell by 4.5 per cent to €30.7 billion, whilst adjusted operating profit fell by 15 per cent to €1.78 billion.
China and Competition Weigh on Results
China, historically a strategic market for Mercedes-Benz, remains the main factor behind this decline. In the third quarter, the German car manufacturer delivered 86,800 cars to the Chinese market, representing a 31 per cent year-on-year drop in sales. Globally, its car deliveries fell by 8 per cent to 407,232 units.
This decline is attributable to intensifying competition from Chinese manufacturers, who are particularly aggressive on pricing and electric vehicle technology. Mercedes-Benz’s premium segment was not spared: sales of its top-end models fell by 21 per cent to 53,900 units.
In addition to this commercial pressure in the Asian market, another reason for the decline is the expenditure associated with the extensive programme of vehicle launches currently underway. Whilst these investments are necessary to refresh the product range, they are weighing heavily on margins in the short term.
Electrification and Cost-Cutting to Restore Margins
To reverse the trend, Mercedes-Benz is focusing on renewing its model ranges and on electrification. The initial results are encouraging: sales of fully electric cars rose by 61 per cent in the third quarter, reaching a record 68,400 units. In Europe, the new electric CLA, GLC, GLB and GLA models have order books filled until 2027.
The manufacturer also intends to boost its competitiveness through artificial intelligence, automation and control of its fixed costs, which have been reduced by around 25 per cent since 2019. A new voluntary redundancy scheme is also set to be launched in Germany from December.
Faced with these challenges, Mercedes-Benz has lowered its financial targets for 2026. The operating margin for its automotive division is now expected to be between 2 per cent and 3 per cent, down from the 3 per cent to 5 per cent previously forecast. The group anticipates an annual operating profit comparable to that of 2025, at around 5.8 billion euros.cv
Key Points:
- The 2026 financial targets have been revised downwards: Mercedes-Benz now forecasts an automotive operating margin of between 2 per cent and 3 per cent, down from the previous range of 3 per cent to 5 per cent.mparable à celui de 2025, soit environ 5,8 milliards d’euros.
- Automotive profit falls by 51 per cent: Mercedes-Benz reported an adjusted operating profit of €560 million for its automotive division, compared with €1.14 billion a year earlier.
- China remains the main weak point: the manufacturer’s deliveries in this market fell by 31 per cent in the third quarter, driven in particular by local competition.
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