Mercedes-Benz has today trimmed its annual outlook despite reporting a rise in second-quarter profit, with the German premium carmaker now forecasting a decline in both sales and revenue as it loses ground in China.
Mercedes, which like German peers Volkswagen and BMW is facing mounting tariff costs and intensifying competition from Chinese rivals, pledged to accelerate cost-cutting measures with a focus on its German plants.
The company reported a 22% rise in second-quarter operating profit to €1.5 billion, helped by cuts to administrative and research & development spending, but missed a Visible Alpha consensus of €1.6 billion.
The group result was supported by strong earnings at its financial services and vans units. It also benefited from a €131m gain linked to the planned sale of its leasing subsidiary Athlon.
“Despite a demanding market environment, we remained on track in the second quarter while continuing to advance our product launch programme,” CEO Ola Kaellenius said, vowing further cost-cutting measures in the second half of the year.
Having previously forecast stagnation, Mercedes now expects both sales of cars and group revenue to come in slightly below last year’s level in 2026, the company said.
The company kept its forecast profit margin for the core cars business but CFO Harald Wilhelm said it was seen at the lower end of the 3%-5% range this year.
Second-quarter car sales slumped 30% in China, the world’s largest auto market, where a crowded race with locals to develop cheaper, tech-laden EVs has ended the decades-long dominance of foreign automakers.
Building on a 25% reduction in fixed costs since 2019, the company said it began intensifying global productivity measures in June, with a particular focus on its German locations.
