Mercedes trims 2026 revenue forecast after weak China business

Car margin slips to 4.0 percent

Group earnings before interest and taxes (EBIT), however, rose by 21.5 percent to around 1.55 billion euros, thanks to significant gains in the Vans van business and in financial services. Increases in sales figures "in Europa um vier und den USA um zehn Prozent" could not offset a slump "dort um 30 Prozent."

Net of all items, group earnings climbed 13.5 percent to around 1.09 billion euros - after most recently a rise in group earnings in the year-on-year comparison from three years earlier, in the second quarter of 2023. From April to June, group earnings climbed from 957 million euros a year earlier to around 1.09 billion euros, as the Stuttgart-based automaker announced.

The cars division itself, however, performed significantly weaker: operating profit at the cars division collapsed by around 94 percent from 783 million euros to "gerade einmal 49 Millionen Euro." On an adjusted basis, EBIT at the cars division fell by 26 percent to 909 million euros.

Impairment in China weighs on results

The reason for the slump was, among other things, an impairment of "über 700 Millionen Euro" or 704 million euros on Chinese shareholdings. In addition, the Swabians took an impairment of 704 million euros on local joint ventures in China because of the difficult business there.

The operating return on sales before interest, taxes and special effects in the cars business that is closely watched on the capital market fell by 1.1 percentage points year-on-year in the second quarter to 4.0 percent. "Auch in einem anspruchsvollen Marktumfeld sind wir im zweiten Quartal auf Kurs geblieben und haben unsere Modelloffensive beschleunigt," said Mercedes CEO Ola Källenius, according to the statement.

Cost-cutting program and EV boom

The cost-cutting program had a positive effect, according to the company: at group level, administrative costs fell by 14 percent. Sales of electric cars also rose by 51 percent in the second quarter to 52,852 vehicles - driven primarily by an 87 percent increase in sales on the European market.

The financial services division also contributed to an overall solid group result, with a hefty 70 percent jump in operating profit. The Vans division posted sales of around 94,000 vehicles, with revenue rising by a good five percent and operating profit by just under three percent.

First-half results in the red

Despite the rise in the second quarter, the view on the full year remains tense: after the first six months, group earnings have fallen by 6.3 percent to around 2.52 billion euros, after already declining by 28.4 percent year-on-year in the full 2024 year. In 2025, profit then collapsed by just under half, from 10.4 billion euros to 5.3 billion euros.

On the revenue side, the books show a decline of 4.1 percent for the first half compared with the same period a year earlier. For 2026, the company expects car sales to fall slightly compared with 2025, which is the reason for the now lowered revenue forecast.

"Der Gewinn von Mercedes ist zwar gestiegen - aber davon sollte man sich nicht blenden lassen," says ZDF business expert Florian Neuhann. Compared with the first half of 2021 - the record year before the coronavirus crisis - Mercedes sales in China have more than halved, and there is currently no end in sight to this development.

Outlook and analyst views

Mercedes-Benz described the market environment in China as "intensified" and competition as intense. On top of this come political headwinds: US President Trump most recently announced he would raise tariffs on cars and trucks from the EU to 25 percent.

Källenius continues to count on a recovery in the second half of the year: in the second half of the year, Mercedes is focusing, according to Källenius, on "mehr neue Modelle zu unseren Kundinnen und Kunden zu bringen und unsere Kostenposition sowie Produktivität weiter zu verbessern." He thereby confirmed the full-year forecast for group EBIT and for the operating margin in the cars business.

Analysts reacted cautiously: in a survey by the forecasting firm Visible Alpha, experts had expected revenue of around 32 billion euros and operating profit of 1.57 billion euros. In fact, EBIT came in slightly below at 1.55 billion euros. Deutsche Bank and Jefferies continue to rate the stock a "Buy," while RBC Capital Markets has it at "Sector Perform."

The report was disseminated on Deutschlandfunk on July 28, 2026. Mercedes-Benz, headquartered in Stuttgart, had already presented the figures on Tuesday - thereby reigniting the debate about the competitiveness of the German auto industry in the world's largest car market.