Mercedes-Benz posts lowest profit since the COVID-19 pandemic

German automaker Mercedes-Benz on Wednesday announced its lowest annual profit since the COVID-19 pandemic, citing the impact of US tariffs and intense competition in the Chinese market.

The company reported a net profit of €5.3 billion ($6.3 billion) for 2025, representing a decline of nearly 49 per cent from 2024. The result, however, exceeded analysts’ expectations, according to estimates compiled by financial data firm FactSet.

Chief Executive Officer Ola Kaellenius said the results were in line with the company’s guidance despite challenging market conditions. He expressed optimism about the future, pointing to plans for more than 40 new model launches over the next three years and a strong product lineup.

Mercedes-Benz expects 2026 to remain challenging, forecasting revenue of around €132.2 billion, roughly in line with the previous year. Core profit is expected to improve significantly compared with 2025, supported by the absence of one-off restructuring costs. However, the company anticipates a car business profit margin of between three and five per cent this year, potentially lower than last year’s five per cent.

Following the announcement, Mercedes-Benz shares fell 4.5 per cent in early trading in Frankfurt, making it the weakest performer on Germany’s DAX index.

The automaker has faced mounting pressure from US import tariffs, slowing demand in Europe and heavy investment costs linked to electric vehicle development amid uneven consumer uptake. At the same time, weakening sales in China have weighed heavily on performance.

Kaellenius described the current period as a historic transformation for the auto industry, taking place in an unusually volatile global environment.

China, the world’s largest automotive market, has become increasingly competitive for foreign manufacturers, with aggressive pricing and strong local rivals such as BYD and Geely. Chief Financial Officer Harald Wilhelm said the company expects further sales declines in China despite new product launches.

Mercedes-Benz’s vehicle sales in China fell 19 per cent last year to their lowest level since 2016, contributing to a 10 per cent drop in global sales volumes.