Mercedes-Benz has reported a sharp decline in first-quarter operating profit, although the German luxury carmaker still came in ahead of market expectations, as it grapples with weakening demand in China, tariff pressures and a challenging transition to electric vehicles.
The company posted earnings before interest and tax (EBIT) of €1.9 billion ($2.22 billion), a 17% drop year-on-year, but above the €1.6 billion consensus forecast from analysts polled by Visible Alpha.
Revenue for the quarter came in at €31.6 billion, slightly below expectations of €31.8 billion.
The group also recorded an adjusted return on sales of 4.1% in its core cars division. While this remained within its full-year target range of 3% to 5%, it marked a significant decline from 7.3% in the same period last year.
Mercedes-Benz, like other German automakers, continues to face mounting pressure from steep tariffs, slowing demand in China, and the costly shift towards electric mobility.
Chief executive Ola Kaellenius has responded with sweeping cost-cutting measures and redundancies, alongside a wave of new product launches aimed at stabilising margins and defending market share in key regions.
The company is also preparing for an aggressive product cycle, with 40 new models planned between 2025 and 2027.
These include the all-electric CLA sedan in the entry-level segment and a refreshed S-Class lineup designed to reinforce its position in the ultra-luxury segment, particularly in China.
Chief financial officer Harald Wilhelm struck an optimistic tone on the company’s medium-term trajectory, saying Mercedes-Benz was making steady progress towards its financial targets.
He said the company was “on track” to reach its guidance of 2026 group EBIT “significantly above” last year’s €5.8 billion result.
Wilhelm also pointed to improving business conditions ahead, adding: “Strong demand for our new products and healthy order books position us well for improved momentum in the second half of the year.”
Beyond product momentum, the finance chief stressed continued discipline on spending as the group works to restore profitability levels.
Mercedes-Benz is targeting a cautious return to higher profitability, with a medium-term margin goal of 8% to 10%, supported by ongoing cost controls and operational restructuring.
Boluwatife Enome
