German luxury automaker Mercedes-Benz reported a 64% decline in third-quarter earnings in its main car division, falling well short of analysts' expectations as Chinese consumers scaled back on luxury spending amid economic challenges.
"The Q3 results fall short of our ambitions," CFO Harald Wilhelm commented, noting the company plans to intensify cost-cutting measures.
Earnings from July to September were impacted by costs associated with model updates and a challenging market, particularly for the new G-Class SUV versions scheduled for next quarter, Mercedes stated.
One positive in the report was the industrial business’s continued cash flow, which rose 2% year-on-year to 2.39 billion euros ($2.59 billion). However, adjusted earnings before interest and taxes (EBIT) in the car division fell to 1.2 billion euros, significantly missing LSEG's projection of a 3.6% drop to 3.19 billion euros.
CEO Ola Kaellenius cautioned that Chinese consumers remain wary of large purchases due to prolonged economic weakness and a domestic real estate crisis. Mercedes-Benz reduced its full-year profit margin target twice in the third quarter, joining other European automakers attributing decreased profits and margins to China’s slowing car market.
These results come amid ongoing discussions between the EU and China over potential tariffs on Chinese EV imports.
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China's domestic automakers have a message for the boardrooms of premium German brands such as Porsche, Mercedes-Benz, and BMW: We are coming for your customers, and we are armed with superior technology at a fraction of the cost.
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Mercedes-Benz(MBGn.DE), opens new tab plans to begin producing a new vehicle at its Tuscaloosa, Alabama, plant in 2027, the company said Thursday, the latest in a series of investments carmakers have announced following U.S. President Donald Trump's aggressive auto tariffs.
Berlin, February 20, 2025 – Mercedes-Benz has launched a fresh cost-cutting initiative aimed at reviving sales and margins, as the German carmaker forecasts a significant drop in earnings in 2025.
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