Mercedes-Benz (MBGn) Stock Falls as Q1 Profit Drops 17% on China Weakness

TLDR

• Q1 net profit fell 17.2% to €1.43 billion, with revenue down 5% to €31.6 billion
• China sales dropped 27% to 111,621 units, dragging overall volume down 6%
• U.S. car sales rose 20% to 81,060 units, partially offsetting the China slump
• BEV sales grew 9% to 44,258 units; PHEV sales fell 20%
• Full-year 2026 guidance maintained, with EBIT expected well above 2025 levels

Mercedes-Benz reported a rough start to 2026, with first-quarter net profit dropping 17.2% to €1.43 billion from €1.73 billion a year earlier. Revenue slipped 5% to €31.6 billion, though that came in slightly ahead of market expectations.

EBIT fell 17% to €1.90 billion. Adjusted EBIT saw a steeper drop of 30%, landing at €1.77 billion.

The biggest drag was China. Sales in the company’s largest single market fell 27% to 111,621 units. The group pointed to planned model changeovers, macroeconomic uncertainty, and a tough competitive environment.

Mercedes-Benz Group AG, MBG.DE

Total Asia unit sales were down 24% to 152,662 vehicles. That’s a heavy blow for a brand that has long relied on Chinese premium buyers.

The Cars segment took the hardest hit, with EBIT collapsing 54% to €809 million. Return on sales fell to 3.5%, compared to 7.3% in the same quarter last year.

Vans and the U.S. Offer a Lifeline

Not everything pointed south. The Vans division had a strong quarter, with EBIT surging 71% to €392 million, even as unit volume edged down 3%.

U.S. car sales rose 20% to 81,060 units, providing a meaningful counterweight to the China decline. CFO Harald Wilhelm noted that strong demand for new products and healthy order books set the company up for better momentum in the second half.

All-electric vehicle sales grew 9% to 44,258 units, with EVs accounting for 19.4% of total Q1 sales. Plug-in hybrids weren’t as fortunate, falling 20% to 37,079 units.

Total vehicles sold in Q1 came in at 419,430 units, down 6% year-on-year.

Cash Flow and Costs Hold Steady

Adjusted free cash flow in the industrial business improved 18% to €2.84 billion. Net liquidity in that segment rose 5% to €33.81 billion since year-end 2025.

R&D spending was trimmed 3% to €2.25 billion, though capitalised development costs rose 21% to €861 million. Property and equipment investment increased 9% to €749 million.

Basic earnings per share fell to €1.49 from €1.74 a year ago.

On the corporate side, Mercedes-Benz signed contracts in April 2026 to sell the Athlon Group to BNP Paribas, with the deal expected to close in the second half of the year. The company also continued its “Own Retail” transformation in Germany, offloading six more operations in Q1.

Mercedes-Benz reaffirmed its full-year 2026 guidance, projecting group revenue at roughly last year’s level and EBIT well above the 2025 figure.

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