Mercedes-Benz Group on Thursday reported a sharp drop in full-year earnings, highlighting the financial strain caused by foreign tariffs and intense competition from Chinese automakers.
The German luxury carmaker posted a 2025 operating profit of 5.8 billion euros ($6.9 billion), a 57% decline from the previous year and well below analyst expectations of 6.6 billion euros, CNBC reported.
The company said its results were heavily affected by a $1.2 billion hit related to tariffs imposed during the Trump administration, alongside foreign exchange challenges and strong competition in China.
"Amid a dynamic market environment, our financial results remained within our guidance, thanks to our sharp focus on efficiency, speed, and flexibility. Now we are all set for 2026," Ola Källenius, CEO of Mercedes-Benz Group, said in a statement.
The drop comes as European automakers face multiple hurdles, including rising production costs, supply chain disruptions, and regulatory pressures.
Passenger vehicles have also been affected by a slow shift to electric mobility, which requires costly adjustments in manufacturing and strategy.
Shares of the Munich-listed company fell about 1% during Thursday afternoon trading, trimming earlier losses. The stock is down roughly 7% year-to-date.
Mercedes just cut its profit in half.
— Chris J Martinez (@ChrisjMartinez4) February 12, 2026
Let that sink in.
Mercedes-Benz Group reported €132B in revenue for 2025.
Operating profit? Down to €5.8B.
Tariffs alone cost them €1B.
China deliveries fell roughly 20%.
Dividend cut.
This isn’t a volume problem.
It’s a margin… pic.twitter.com/mvmxv4D88u
Mercedes-Benz Expects Flat Revenues
Looking ahead, Mercedes-Benz plans additional cost-cutting measures in 2026 while introducing several new models, aiming for an adjusted return on sales of 3% to 5%, down from the 5% growth reported last year.
The automaker expects revenues to remain roughly flat at around 132 billion euros, while group earnings before interest and taxes (EBIT) are projected to be "significantly above" 2025 levels.
Group free cash flow for the industrial business is expected to be slightly below last year's 5.4 billion euros.
Mercedes-Benz is not alone in facing tariff-related losses. According to NY Post, US automakers like Ford and General Motors reported charges of $2 billion and $3.1 billion respectively in 2025, and anticipate similar hits in 2026.
Nissan has also projected a roughly $2 billion tariff impact despite increasing domestic production.
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