Mercedes-Benz profits plunge 57 percent in 2025 amid tariffs and China slowdown

Thursday 12 February 2026 - 09:50

By: Dakir Madiha

Mercedes-Benz profits plunge 57 percent in 2025 amid tariffs and China slowdown

Mercedes-Benz Group reported a sharp decline in earnings for 2025, as global tariffs and mounting competition in China weighed heavily on the German luxury carmaker’s performance.

The Stuttgart-based manufacturer said its group earnings before interest and taxes fell 57 percent to 5.8 billion euros in 2025, down from 13.6 billion euros a year earlier. The result also came in below analyst expectations of 6.6 billion euros, according to Reuters. Group revenue slipped 9 percent to 132.2 billion euros, compared with 145.6 billion euros in 2024.

The downturn reflects a challenging environment marked by trade barriers in key markets and intensifying price pressure in China, where domestic electric vehicle makers continue to gain ground. Mercedes-Benz has been navigating higher import duties and softer demand in the world’s largest auto market, factors that have compressed margins across the sector.

Despite the weaker headline figures, the company posted an adjusted EBIT of 8.2 billion euros, supported by cost savings exceeding 3.5 billion euros within its Mercedes-Benz Cars division. The adjusted return on sales for the automotive unit declined to 5.0 percent from 8.1 percent the previous year. Management indicated that, excluding the impact of tariffs, the margin would have reached 6.1 percent.

Unit sales of passenger vehicles dropped 9.2 percent to 1,801,291 cars, with China accounting for a significant share of the decline. High-end models represented 15 percent of total deliveries, providing some cushion against margin erosion as the company leaned on its premium positioning.

Reflecting the financial pressure, Mercedes-Benz proposed a reduced dividend of 3.50 euros per share, compared with 4.30 euros distributed for 2024.

Looking ahead, the automaker forecast that group EBIT in 2026 would be “significantly higher” than 2025 levels, while revenue is expected to remain broadly stable. The outlook is underpinned by what executives describe as the largest product offensive in the company’s history, with more than 40 new or updated models scheduled for launch by the end of 2027.

Strong demand for newly introduced electric models has already extended order books into 2026. Production lines at several German plants are operating in three shifts to meet demand for vehicles including the electric CLA and the GLC EV.

At the same time, Mercedes-Benz is advancing structural changes aimed at strengthening long-term competitiveness. The company is targeting a 10 percent reduction in production costs by 2027 and plans to double those savings by 2030. Agreements reached with the works council include voluntary departures and moderated wage increases, alongside an extension of job security guarantees through 2034.

Chief executive Ola Källenius described the product rollout and cost measures as essential steps in response to intensifying global competition. He said the company is working to become faster, more agile and more resilient in an increasingly uncertain environment.

The results were announced during a year marking the 140th anniversary of Carl Benz’s 1886 patent for the first automobile, a milestone that underscores the company’s long industrial legacy even as it confronts new economic and technological pressures.