Mercedes earnings plunge as tariffs, China pressure bite

Mercedes-Benz has reported a sharp fall in its 2025 financial performance, highlighting the growing pressure facing global luxury carmakers amid trade tensions and slowing demand in key markets. The German automotive giant said full-year earnings dropped by 57%, a much steeper decline than analysts had predicted.

The company posted group earnings before interest and taxes (EBIT) of 5.8 billion euros for 2025. This fell well short of the 6.6 billion euros forecast by analysts surveyed by Visible Alpha and marked a dramatic decline from 13.6 billion euros recorded the previous year. The results underline how quickly profitability has weakened across the premium vehicle segment, News.Az reports, citing Reuters.

Mercedes pointed to several major challenges behind the downturn. Intensifying competition in China, one of the company’s most important markets, has squeezed margins, while tariffs and trade barriers have increased production and export costs. Together, these factors have created what executives describe as one of the toughest operating environments in recent years.

The results also reflect broader shifts in the global auto industry, where legacy manufacturers are facing rising competition from domestic Chinese brands and the heavy investment costs linked to electrification and digital technologies. As the transition toward electric vehicles accelerates, companies like Mercedes are being forced to balance long-term transformation spending with short-term profitability pressures.

Despite the earnings slump, Mercedes continues to push forward with new model launches and technology investments, signaling confidence in long-term demand for premium vehicles. However, analysts say recovery will depend heavily on stabilizing trade conditions and regaining momentum in the Chinese market, which remains critical for future growth.

News.Az 

By Aysel Mammadzada