Profits at German car giant fall to low points not seen since pandemic

Mercedes-Benz Group has released its full-year 2025 financial results, reporting a sharp drop in profitability that marks the company’s weakest performance since the depths of the Covid-19 pandemic.

The automotive giant earned €5 billion less in profit in 2025 than in 2024, while revenue declined by 9%, German media outlets reported citing the company report, with China accounting for the steepest drop.

According to the Stuttgart-based carmaker, net profit fell by around 49% year-on-year, from €10.4 billion to €5.3 billion. Revenue decreased from €145.6 billion to €133.2 billion. Global sales of passenger cars and Mercedes-Benz Vans dropped from 2.39 million units in 2024 to 2.16 million in 2025. Compared with 2023, revenue and vehicle sales have now declined by 13%, while net profit has plunged 63% from €14.5 billion two years ago — marking the second consecutive year of significant contraction in key financial indicators.

Management attributed the downturn primarily to three major headwinds. 

US tariffs imposed under the current administration resulted in more than €1 billion in direct costs. 

In China, the world’s largest car market and Mercedes-Benz’s single most important market — accounting for nearly one-third of global passenger car sales — revenue fell by 19% amid intense price competition from domestic manufacturers. Sales in China were down almost 20%, significantly eroding margins and volumes.

Softer net pricing and unfavourable currency movements added further pressure.

Despite the decline, Mercedes-Benz said the results were broadly in line with prior expectations. The company noted that cost-cutting measures helped cushion part of the profit decline. Its “Next Level Performance” program generated more than €3.5 billion in savings in the cars division alone, through reductions in material costs, production efficiencies, and selling, general and administrative expenses.

The savings initiative, launched more than a year ago, aims to reduce production costs and fixed costs by 10% each by 2027. As part of the program, the group introduced a severance scheme for employees outside of production.

Looking ahead, CEO Ola Källenius struck an optimistic tone. He expects revenue in 2026 to remain at roughly the same level as in 2025, while earnings before taxes are projected to increase significantly.

Mercedes-Benz is also adjusting its long-term strategy, scaling back production capacity to around 2.2 million units by 2028 and placing greater emphasis on high-end models and efficiency improvements as it seeks to restore profitability.

By Nazrin Sadigova