Mercedes-Benz improves profitability despite weaker global sales

Tuesday 28 July 2026 - 16:59

By: Azzat Manal

Mercedes-Benz improves profitability despite weaker global sales

Mercedes-Benz delivered mixed financial results in the second quarter of 2026, with stronger operating profitability offsetting a decline in revenue and weaker global vehicle sales. The German automaker benefited from solid performances in its financial services and commercial vehicle divisions, but a sharp downturn in China prompted the company to lower its full-year outlook.

Between April and June, Mercedes-Benz reported an operating profit of approximately €1.55 billion, representing a 21.5% increase compared with the same period a year earlier. However, revenue fell by 3.3% to €32.1 billion, reflecting the challenging conditions affecting parts of the global automotive market.

Financial services and commercial vehicles support performance

The group's financial services business was one of the strongest contributors to its quarterly results. Adjusted operating profit in the division increased by 70% to €492 million, helping compensate for weaker performance in passenger cars.

The commercial vehicle division also remained resilient, recording a 3% rise in operating profit to €454 million. The results highlight the importance of these businesses as Mercedes-Benz navigates a more uncertain economic environment.

China weighs on passenger car performance

The passenger car division faced greater pressure during the quarter. Its adjusted operating profit dropped by 26% to €909 million, while its operating margin declined from 5.1% to 4%.

Global passenger car sales fell by 8% to 417,765 vehicles. The main source of weakness was China, where deliveries dropped by 30%. In contrast, Mercedes-Benz recorded stronger sales in Europe and the United States, with deliveries increasing by 4% and 10%, respectively.

The decline in China has become a significant challenge for international carmakers as competition intensifies and consumer demand evolves in the world's largest automotive market.

Mercedes-Benz cuts its 2026 outlook

In response to weaker demand in China, Mercedes-Benz has revised its expectations for the full year. The company now anticipates that passenger car sales and revenue will be slightly below their 2025 levels, compared with its previous forecast of broadly stable performance.

The adjustment reflects growing uncertainty surrounding the global automotive industry, particularly in China, where economic conditions and intensifying competition continue to affect major international manufacturers.

Electric vehicle sales continue to grow

Despite the broader challenges, Mercedes-Benz is making progress in the electric vehicle market. Sales of battery-electric vehicles increased by 51% in the second quarter, reaching 52,852 units.

Europe was a particularly strong market for electric models, with registrations rising by 87%. The figures underline the continued shift toward electrified mobility and the growing importance of electric vehicles in the group's long-term strategy.

However, the company also recorded a €704 million impairment related to its investments in several Chinese joint ventures. This charge added pressure to the reported results of the automotive division and further highlighted the financial challenges facing the group in the Chinese market.

Overall, Mercedes-Benz enters the second half of 2026 with stronger profitability in several business areas but faces continued pressure from weaker passenger car sales and a difficult Chinese market. The company's ability to manage costs, expand its electric vehicle portfolio and strengthen its position in key international markets will remain crucial to its performance for the rest of the year.