The profit margin for Mercedes’ car division nearly halved in the third quarter. The adjusted return on sales fell from 4.8 percent in the same period last year to 2.5 percent, the Stuttgart-based automaker announced on Wednesday. It cited a collapse in business in China and expenditures on new products as the reasons.
Image: Shutterstock
Operating profit in the automotive division fell to 560 million euros—less than half of what it was in the same period last year. In China, sales dropped by 31 percent, with 86,800 vehicles delivered. Market conditions became “even more challenging over the course of the year, particularly in China,” explained Mercedes CEO Ola Källenius.
On Tuesday, the automaker lowered its revenue and profit expectations for 2026, citing issues in the Far East in particular. For the full year, the company now anticipates a return on sales of only two to three percent, down from the previously projected three to five percent. Regarding pre-tax profit, Mercedes now expects a result on par with the previous year, whereas a significant improvement had previously been forecast.
“In addition to an increasingly challenging market environment in China, the Mercedes-Benz Group expects higher costs in the fourth quarter, including increased material costs,” the company stated. When releasing its half-year results in July, Mercedes had already lowered its revenue forecast, citing difficulties in China. In the second quarter, sales in the People’s Republic had plummeted by 30 percent.
Operations in China are causing major difficulties for German automakers. Consumer sentiment in the world’s largest automotive market remains poor, while German electric vehicles are struggling to gain traction against significantly cheaper Chinese models.
Källenius highlighted “sustained sales growth in Europe and the U.S.,” as well as rising sales of electric vehicles. Between July and September, sales of purely electric vehicles increased by 52 percent compared to the same period last year, reaching over 78,000 units. “Our new models are resonating with our customers,” the CEO explained.
“Consistent cost discipline and strong earnings contributions from Mercedes-Benz Vans and Mercedes-Benz Financial Services are helping us cushion the headwinds,” he added. The commercial vehicle division proved profitable, posting an operating profit of 397 million euros and a return on sales of 9.4 percent. The financial services division also saw significant growth, with an operating profit of 445 million euros.
Author: AFP – pe/hcy – Translated by Blackout News
Sources: AFP Press Portal