“China” And Import Duties Affect Mercedes’ Profit

For 2026, the manufacturer predicts a profit margin of 3 to 5 percent, compared to 5 percent last year. Revenue fell by 9 percent in 2025 to €132.2 billion, leaving a net profit of €5.3 billion. This is almost half the previous year’s net profit of €10.4 billion.

CEO Ola Källenius said Mercedes’ financial results were in line with expectations and reflect a “sharp focus on efficiency, speed, and flexibility. ” Källenius has opted to focus more on luxury vehicles and reduce the entry-level model lineup. This increases revenue per vehicle but also makes Mercedes more vulnerable as demand for expensive cars appears to be declining.

This is also evident in the Chinese market, where the car brand’s sales fell by about a fifth last year. Chinese brands like BYD and Xiaomi, which offer electric cars with all sorts of luxury features at a lower price, are more popular. Nevertheless, China remains Mercedes’ most important market, accounting for almost a third of global sales.

Mercedes has partially offset declining revenue by cutting costs in its automotive division, totalling €3.5 billion. The company also aims to reduce production costs by 10 percent by 2027, compared to 2024 levels. Material costs are also expected to fall by another 10 percent. Due to slow business, Mercedes plans to cut its dividend for this year.

Nissan is also struggling. The Japanese automaker expects a net loss of 650 billion yen (3.6 billion euros) in the fiscal year ending in March. In the past quarter, Nissan suffered a loss of 156 million euros, it was announced Thursday. That was less severe than analysts had expected.

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