Auto giant Mercedes saw a steep drop in third‑quarter profits, with operating profit plunging by 70% year‑over‑year to €750 million ($873 million)., according to earnings report released by the company on Wednesday.
The company pointed straight to the tariffs imposed by President Donald Trump on vehicles imported into the United States, and to weakening demand in China, which remains one of its most important markets.
The company also noted that when the quarter is adjusted for €1.3 billion in one‑time charges, mostly tied to a voluntary redundancy program that began in Germany in April, the earnings decline was 17% compared to last year.
Even with the weaker quarter, Mercedes reaffirmed its full‑year outlook, supported by strong sales in its top‑end luxury segment.
Trump’s tariffs force strategic adjustments for Mercedes
The new U.S. 15% import duty on European cars that took effect September 1 drove up costs at a critical time for the company. Ola Källenius, the chief executive, told analysts on a call that the company has been working to manage the impact.
“We are very aware of the challenges,” Ola said. “We have a plan.” He said the company would continue to focus on efficiency and the “introduction of an array of new models.”
Earlier in July, Mercedes cut its earnings projection for the year because of the U.S. tariff environment.
The same pressure affected BMW, Volkswagen, and Porsche, forcing all of them to reassess whether expanding production inside the United States makes more sense than continuing to rely on imports.
Ola said the United States is still considered a growth market, and confirmed that Mercedes is reviewing whether to expand production beyond its existing SUV plant in Alabama.
When asked if the company will raise prices in the U.S. to offset increased import costs, he declined to provide details.
Shares of Mercedes rose 3.8% in early trading on the German exchange following the release of the results. The movement came after the company confirmed it would repurchase €2 billion worth of shares. Analysts had expected a buyback, but the size of the program stood out. Patrick Hummel, an analyst at UBS, said in a note that “the relatively high amount sends a signal of confidence.”
Chinese sales slump as local EV rivals gain ground
China continues to be the company’s weakest market. Sales in the country were down 27% in the third quarter. Mercedes faces slowing demand from local buyers and intense competition from BYD, Xiaomi, and other Chinese brands that are expanding in the EV space.
To respond, Mercedes plans to launch a semi‑autonomous model in China later this fall. The automaker also plans to introduce more than 40 new vehicles next year, spanning electric, hybrid, and V‑8 combustion engine models. This marks a shift away from its previous push toward an electric‑only future.
At the same time, the restructuring program has sparked major workforce changes inside the company. Harald Wilhelm, the chief financial officer, said on the call that “a lot of workers are expected to leave the company by the end of the year.”
Join a premium crypto trading community free for 30 days – normally $100/mo.
Source: https://www.cryptopolitan.com/mercedes-q3-earnings-miss/
