The key facts

  • Mercedes-Benz expects 2026 operating profit of 5.8 billion euros instead of the previously promised growth of at least 15%
  • Deliveries to China fell 29% over nine months — after already hitting their lowest level since 2016 last year
  • The company's shares fell 4.2% after the announcement; full third-quarter results will be published on Wednesday

Third German auto giant downgrades its forecast

On Tuesday, Mercedes-Benz became the third major German automaker to lower its annual forecast due to severe conditions in the Chinese market, underscoring the scale of the crisis in the industry. The company now expects operating profit for 2026 to remain at last year's level of 5.8 billion euros ($6.5 billion), whereas it had previously promised growth of at least 15%. The return margin of the core automotive business is now forecast at 2–3% instead of the previous 3–5%. This was reported by AFP.

China weighs on sales, shares fall

In addition to the difficulties in China — the world's largest automotive market — the company cited rising material costs. Mercedes-Benz deliveries to China, which last year had already fallen to their lowest level since 2016, dropped a further 29% over the nine months through the end of September. Following the announcement, Mercedes-Benz shares fell by 4.2%, while Volkswagen and BMW shares declined by just over 2%. BMW and Volkswagen had already cut their annual forecasts earlier: weak demand combined with fierce competition from Chinese manufacturers such as BYD and Xiaomi is eroding their profits.

Consequences for the industry and preliminary quarterly results

Being squeezed out of China has already led to painful restructuring in the German automotive industry — one of the country's largest employers. According to AFP, Mercedes-Benz chief Ola Källenius urged German workers to put in unpaid overtime while simultaneously expanding production in Hungary, where, according to him, costs are roughly 70% lower than in Germany. Volkswagen, for its part, plans to cut 120,000 jobs worldwide by the end of the decade — the largest restructuring in the history of the auto industry, exceeding the loss of 50,000 jobs following General Motors' bankruptcy in 2009. Mercedes-Benz's preliminary third-quarter results show operating profit of 1.77 billion euros and an automotive business return margin of 2.5%. The company's shareholder Deka Investment, through its head of sustainability Ingo Speich, told AFP that 'structural problems are not easing,' and that the weak results underscore the need for further cost cuts and attractive new products — 'both of which need to be implemented as soon as possible.' The company will present its full third-quarter results on Wednesday.