Mercedes-Benz Profitability Dropped To Almost Zero

Mercedes’ profitability drops dramatically. Profits in the passenger car business have almost halved, and the German car giant has been forced to cut its forecasts. Only 2.5 percent of revenue remains as adjusted operating profit, which is extremely modest in the auto industry.

Adjusted operating profit fell by almost 51 percent, from 1.14 billion euros to only 560 million euros. At the same time, the adjusted operating margin decreased from 4.8 to only 2.5 percent. This means that for every 100 euros of revenue from the sale of passenger cars, Mercedes realizes only about 2.50 euros of adjusted operating profit. Behind this decline are fierce competition in the Chinese market, unfavorable exchange rate effects and increased costs of development and introduction of new car models.

Mercedes is forced to reduce its business forecast for the whole year. The passenger car segment is expected to post an adjusted operating margin of just 2 to 3 percent in 2026, while the previous forecast was between 3 and 5 percent.

But there is also good news. Sales of electric cars increased by as much as 61 percent during the quarter. However, this growth is not enough to reverse the negative profitability trends for now. The entire Mercedes-Benz Group, however, remained profitable. Operating profit amounted to 1.77 billion euros, which was contributed by, among other things, business with commercial vehicles and financial services.

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