Mercedes Reports 15% Drop in Third-Quarter Earnings

Mercedes-Benz Group earnings declined in the third quarter as sales in China weakened.

The company said Wednesday that revenue for the quarter was €30.7 billion, down 4.5 percent from the same period a year earlier. Adjusted group earnings before interest and tax fell 15 percent. The statement was released a day after the company lowered its full-year outlook, citing cost pressures and the drop in mainland China sales.

At the core cars division, adjusted earnings dropped to €560 million. The division's operating margin narrowed to 2.5 percent from 4.8 percent a year earlier. Mercedes-Benz Group attributed the change to lower contributions from China, currency effects and costs associated with product launches.

Chief executive Ola Källenius said market conditions had become “even more challenging”, particularly in China. He pointed to growth in Europe and the United States and to record electric-vehicle sales as evidence that newer models are finding buyers.

China vehicle sales fell 31 percent in the third quarter compared with the same quarter last year. The company said the decline reflected weaker luxury demand, price competition and stronger domestic rivals. Volvo chief executive Håkan Samuelsson said last week that the market for western-developed cars in China is not returning. BMW and Volkswagen have also reported that conditions in China are weighing on their earnings.

Mercedes-Benz Group is pursuing cost reductions, including an effort to save about 8 percent on materials compared with 2024 levels, with lower targets in China. The company is using voluntary redundancy programs to reduce its German workforce and has reduced global passenger-car capacity. The company did not provide a timetable for margin recovery in its statement.

The company is also planning its largest product offensive, with more than 40 new or refreshed models due by the end of 2027. The electric CLA and GLC are being rolled out, followed by new versions of the C-Class, S-class, GLE and GLS. For China, Mercedes-Benz Group has accelerated local development and sourcing and is producing long-wheelbase versions of models including the electric GLC.

Shares fell 3.9 percent Tuesday after the company lowered its outlook for the fourth quarter, citing higher materials costs. The year-to-date decline in the shares reached 34 percent.