Because Of Import Taxes, Mercedes-Benz Anticipates Decreased Profits

Mercedes-Benz now expects a profit margin of 4 percent this year. Previously, the manufacturer had expected 6 percent. That forecast was withdrawn in April due to uncertainty surrounding Trump’s trade policy.

It has been hit hard by import tariffs. For much of the second quarter, a 27.5 percent tariff was in effect on cars shipped from the European Union to the United States. The company also exports SUVs from its Alabama plant to China. These SUVs were subject to local tariffs of over 100 percent at the beginning of the last quarter. These tariffs were reduced to around 35 percent after the preliminary trade agreement between the US and China was reached in mid-May.

Mercedes also warned that group revenue will be significantly lower than last year. Besides the import duties, the company is also suffering from the fierce price war for electric vehicles in China. As a result, Mercedes is struggling to find customers for its more expensive electric models like the EQS. Chinese carmakers like BYD are also expanding significantly in the stagnant European car market.

The German company previously announced that it had sold 9 percent fewer cars in the second quarter than in the same period a year earlier. Demand in the US and China, two key markets for the company, was particularly under pressure due to import duties.

• Also See: Mercedes-Benz’s Second-Quarter Deliveries Fell By 9%