Mercedes-Benz warns of further hit from weak China sales and tariffs
Baku, February 12, AZERTAC
Global automakers’ earnings highlighted persistent strains from US tariffs and Chinese electric car competitors, as Mercedes-Benz warned of a further squeeze next year and Nissan vowed to fight back by exporting EVs from China to emerging markets, according to Financial Times.
The German luxury car producer said it expected an operating profit margin in its core autos business of between 3 and 5 per cent in 2026, while sales volumes would remain flat, following a steep drop in profits last year.
Mercedes-Benz’s strategy to focus on top-end models on hopes of driving up its profitability has lost momentum amid intensifying competition.
Its operating profit margin in its core autos business has fallen from 14.6 per cent in 2022 to just 5 per cent last year and is set to decline further before the carmaker expects to see a recovery.
The company’s earnings before interest and tax fell 57.2 per cent to €5.8bn in 2025, slightly below analysts’ expectations. Net profits fell 48.8 per cent to €5.3bn.
Auto sales at Mercedes-Benz dropped 9.2 per cent in 2025, which was “mainly down to . . . the fierce competition in China”, said chief executive Ola Källenius.
Sales fell 19 per cent in 2025 in China, where local carmakers have increasingly taken on foreign brands with more premium electric vehicles.
The company said its automotive result had been boosted by €3.5bn in cost savings, supported by a major restructuring plan launched last year.
The figure was not enough to compensate for the hit from lower volumes and tariff costs, which have been driven up by US President Donald Trump’s trade policy.
Tariff charges totalled about €1bn in 2025, Mercedes-Benz said. The impact was outweighed by negative foreign exchange effects, which totalled almost €1.5bn in the company’s automotive division.
The company said the impact of US tariffs and currency effects over the full year cut the equivalent of 1 per cent from its operating margin in 2026 compared with 2025.
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