Mercedes-Benz experiences a notable decline in earnings, with a Q2 loss of 68.7%. - Significant Dip in Mercedes-Benz's Profits: Q2 Earnings Plummet by 68.7%
In the automotive industry landscape of 2025, Mercedes-Benz has been grappling with the impact of trade policies and tariffs, resulting in a significant decline in profit and car sales in both the US and Chinese markets.
The US tariffs, a legacy of President Donald Trump's administration, have put pressure on Mercedes-Benz's pricing and sales, leading to a reduction in the carmaking profit margin forecast from a previously expected 6-8% to as low as 4%. This reduction in the profit margin was seen in the second quarter, where the tariffs resulted in a 150 basis points decrease in the company's adjusted operating profit margin, amounting to an estimated €362 million (about $420 million) impact in that quarter alone.
Deliveries of cars to dealers in the US decreased by 12% due to US tariffs on cars that came into effect in April. However, it's important to note that the mentioned reduction in US tariffs does not apply to the Chinese market.
In China, Mercedes-Benz's largest market, car sales dropped by nearly 20% year-on-year in Q2 2025. The rise of domestic electric vehicle brands has made them cheaper and more popular, posing strong competition to Mercedes. This slowdown in China, combined with US tariffs, led the company to lower its annual revenue guidance to significantly below 2024 levels.
To counter these challenges, Mercedes plans to focus more on its high-end luxury models, which offer higher profit margins, and maintain strict cost controls to offset the lower sales volumes.
On a positive note, US President Donald Trump and EU Commission President Ursula von der Leyen announced a breakthrough in the trade dispute on Sunday evening, which may bring some relief to the industry in the future.
Despite these challenges, 2025 has been a difficult year for Mercedes-Benz’s profitability and sales performance, with the company experiencing a 19% decrease in car sales in the Chinese market in the second quarter compared to the same period last year, and a 56% year-on-year drop in net profit in the first half of 2025, from €6.1 billion to €2.7 billion. Revenue also declined by 10% year-on-year in Q2 2025.
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- In light of the difficult year encountered by Mercedes-Benz, the company could potentially seek community aid to adjust its financial situation, especially considering the significant decline in profitability and sales.
- To further secure its future and counter continued challenges, Mercedes-Benz might also be looking for aid in the construction of new buildings, such as research and development centers, to innovate and develop more competitive products in the rapidly evolving automotive industry.
