Mercedes: Profit Up, Sales Down

China Passenger-Car Sales Plunge 30% in Q2

The core problem is China. Mercedes-Benz Cars saw Chinese passenger-car sales drop roughly 30% in the quarter Morningstar. That is a steep fall for a market that was once the company's biggest growth engine. The weakness pushed total Cars unit sales to 417,765 vehicles — an 8% decline from the same period last year.

Mercedes-Benz is now the latest automaker to formally warn investors about China's increasingly tough market Market Screener. The company lowered its full-year forecast and now predicts both sales and revenue will come in slightly below last year's levels. Management called the Chinese environment a source of continued caution going forward.

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Cost Cuts and Vans Kept Profits Alive

While car sales fell, aggressive cost discipline picked up the slack. Mercedes-Benz slashed administrative and R&D spending and pushed productivity measures across its operations Business Today. The Vans division and Financial Services arm also posted strong results, providing a cushion against the weakness in the core automotive business.

A one-off gain of €131 million — tied to the planned sale of its Athlon vehicle-leasing subsidiary — also padded the quarterly EBIT figure Yahoo Finance. Strip that out, and the underlying profit picture looks a bit less impressive. Still, adjusted EBIT rose roughly 16-21% year over year, depending on the measure used.

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Europe and U.S. Bucked the Regional Gloom

Not every market was a drag. European passenger-car sales rose about 4% in the quarter, and U.S. sales climbed around 10% Morningstar. Those gains showed that demand for Mercedes cars remains healthy outside China. But the numbers were not big enough to offset the enormous hole left by the China slump.

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Mercedes Bets on Electric Vehicles to Stabilize 2026

Looking ahead, Mercedes-Benz raised its target share of electrified vehicles to 23-25% for 2026 Yahoo Finance. Electrified vehicles include both fully electric cars and plug-in hybrids. The company sees growing the electric mix as a key tool to protect margins and stay competitive in a rapidly changing market.

Management signaled further cost reductions in the second half of the year, including more cuts to administrative spending and a continued push for global efficiency Business Today. The message was clear: Mercedes-Benz expects 2026 sales and revenue to fall below prior-year levels, and it is betting on discipline — not volume — to protect the bottom line.

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