Mercedes-Benz has significantly reduced financial expectations for 2026, signalling the deterioration of conditions in the German automotive industry, which is facing increased competition in China and increased material costs.
The German manufacturer expects basic profit to remain at around 5.8 billion euros, giving up the earlier forecast for an increase of at least 15 percent.
Mercedes-Benz is the third largest automotive company in Germany that has revised the financial perspective for this year, at a time when demand on the Chinese market is weakening and competition by domestic producers is becoming stronger.
The company has also lowered the forecast for profit margins in the auto business, bringing it down at the 250 percent interval from 350 percent as expected earlier.
The preliminary data for the third quarter shows that basic profit reached 1.77 billion euros, while the profit margin in the auto division was 2.5 percent. Full financial results for this period are expected to be released Wednesday.
One of the main factors weighing on the company is the decline in performance in China, the market that has been crucial for years to German automotive producers.
The delivery of Mercedes-Benz vehicles to China fell by 29 percent during the first nine months of 2026. This decline comes after sales in this market had reached the lowest level last year since 2016.
In addition to the weaker demand, the company is facing increased competition from Chinese producers, including BYD and Xiaomi, who are strengthening their positions through competitive bids and expanding presence on the automotive market.
After the announcement of the review of financial projections, Mercedes-Benz’s shares dropped by more than 4 percent, while the Volkswagen and BMW lost about 2 percent.
The two other German producers had earlier lowered financial projections for this year, indicating that difficulties are affecting a large part of Germany’s automobile industry.
Meanwhile, Mercedes-Benz Executive Director Ola Kälenius has called on employees in Germany to work more hours without additional pay. At the same time, the company is expanding production in Hungary, where, according to Källenius, costs are about 70 percent lower than in Germany.
Volkswagen is also planning a wide restructuring process, with the aim of cutting 120 thousand jobs worldwide by the end of the decade.
If accomplished, this plan would constitute one of the largest restructuring processes in the history of the automobile industry, exceeding the 50,000-seat job cuts following General Motors’ bankruptcy in 2009.
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Source Layer: Signal
