Mercedes-Benz Q3 Revenue Falls 4.5 Percent As China Slump Deepens
Mercedes-Benz Group AG reported a 4.5 percent drop in third-quarter revenue to €30.7 billion, driven by a sharp downturn in the Chinese market that forced the German carmaker to lower its profit outlook. Adjusted group earnings before interest and tax declined 15 percent, according to company data released on Wednesday.
The financial results followed a profit warning issued on October 27, when Mercedes cut its 2026 profit forecasts. The company told investors that its core car business would earn an adjusted return on sales of just 2 percent to 3 percent this year, down from a prior range of 3 percent to 5 percent. The guidance downgrade triggered a 3.9 percent slide in shares, pushing the year-to-date loss to 34 percent.
Core Car Division Margins Narrow Sharply On Mainland Weakness
At the core cars division, adjusted earnings more than halved to €560 million in the third quarter. The operating margin narrowed to 2.5 percent, down from 4.8 percent in the same period last year, reflecting weaker contributions from China alongside currency pressures and product-launch costs.
Chief executive Ola Källenius pointed to continued growth in Europe and the United States, as well as record electric-vehicle sales, as evidence that newer models are gaining traction. However, Källenius stated that market conditions had become even more challenging, particularly in China, where vehicle sales fell 31 percent in the third quarter from a year earlier. That extended a decline driven by weaker luxury demand, fierce price competition, and domestic rivals.
German Automakers Face Shared Structural Pressures In Asia
The regional pressure extends across Germany’s entire auto industry. BMW and Volkswagen have similarly warned that deteriorating conditions in China are hurting earnings, highlighting how a market that once generated outsize profits has become a major structural problem.
Volvo chief executive Håkan Samuelsson stated last week that the market for western-developed cars in China is not coming back, underlining the permanence of the shift. For Mercedes, the reversal strikes at the core of a long-term strategy to sell fewer cars while concentrating on expensive, higher-margin models such as the S-Class, Maybach, G-Class, and AMG range.
Cost Cuts And Forty New Models Target Recovery
Mercedes is responding to the downturn with an extensive cost-cutting program. The company aims to reduce production costs per vehicle by about 10 percent by 2027 compared with 2024 levels, cut fixed costs by more than 10 percent, and trim material costs by roughly 8 percent, with even steeper targets set for China.
Concurrently, the manufacturer is advancing its biggest-ever product offensive. More than 40 new or refreshed models are scheduled for release by the end of 2027. The electric CLA and GLC are already rolling out, supported by new versions of the C-Class, S-Class, GLE, and GLS designed to rebuild demand and restore pricing power.
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