Mercedes-Benz recorded a sharp decline in operating profit in the first quarter. EBIT fell to 1.9 billion euros, with a 17% decrease compared to the previous year. Despite the difficulties, the premium group emphasized that the launch of new models and cost containment should support a recovery in the coming months. However, a number of factors remain in the background that continue to compress margins, particularly the pressure from Chinese competition and customs duties, which affect the Chinese market more markedly.
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Mercedes believes in a recovery
The situation in the Asian country, along with the transition to electric vehicles, is weighing on German car manufacturers like Mercedes. In response to the sector’s challenges, CEO Ola Kallenius indicated the need to reduce costs and, at the same time, to reorganize the company also through job cuts. The declared goal is to accelerate the pace of introducing new products, in order to strengthen competitiveness and limit the economic impact of more difficult market conditions.
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Analysts’ estimates exceeded
In terms of results, Mercedes still exceeded analysts’ expectations. Reported EBIT is better than the average estimate from Visible Alpha (1.6 billion euros) and shares rose 2.2% in pre-market trading. CFO Harald Wilhelm reiterated the course towards the goal of a group EBIT for 2026 “significantly higher” than the 5.8 billion euros of the previous year, relying on sustained demand for new models and a solid order book. Meanwhile, automotive margins for the quarter fell to 4.1% (from 7.3%), remaining within the expected range for the year (3%-5%). Additionally, the Star brand plans to launch 40 new models between 2025 and 2027, including the fully electric CLA and the renewed S-Class.
