Mercedes-Benz Lowers 2026 Profit Outlook Due to China Pressures

Mercedes-Benz reduced its full-year profit outlook on Tuesday due to difficult market conditions in China and increasing material expenses. The German car manufacturer now anticipates its core profit for 2026 to stay flat at approximately €5.8 billion, a shift from its earlier projection of at least a 15% increase.

The adjustment makes Mercedes-Benz the third major German automotive company to lower its forecasts recently. The firm also reduced its projected profit margin for its core car division to a range of 2% and 3%, down from the previous forecast of 3% to 5%. In addition, the company reported a preliminary third-quarter core profit of €1.77 billion alongside a 2.5% profit margin for its car division, with full results scheduled for release on Wednesday.

Following the announcement, Mercedes-Benz shares dropped by over 4%, while Volkswagen and BMW shares each decreased by about 2%. Both BMW and Volkswagen had previously reduced their full-year projections because of weak demand and intense competition from Chinese competitors like BYD and Xiaomi.

Vehicle deliveries for Mercedes-Benz in China dropped by an additional 29% during the first nine months of 2026, following a decline to their lowest level since 2016 last year. Meanwhile, CEO Ola Kallenius has asked German employees to work extra hours without additional pay and is expanding production in Hungary, where costs are about 70% lower than in Germany. Volkswagen also intends to eliminate 120,000 jobs globally by the end of the decade in a historic restructuring effort.