Mercedes has even bigger problems in the Chinese market

Problems in the Chinese market Mercedes is weakening in its core business As of: October 28, 2026 • 12:58 p.m

Mercedes earned significantly less operationally in its car division in the third quarter. The group is particularly affected by the poor business in China. He now wants to rethink the strategy for the world's largest car market.

Mercedes-Benz is increasingly feeling the effects of the crisis on the Chinese car market. The adjusted return on sales in the core business, the passenger car division, fell to 2.5 percent in the third quarter, after 4.8 percent in the same period of the previous year. The Stuttgart car manufacturer announced this today. The reasons are the declining Chinese business and spending on new products.

The automotive division's operating profit fell to 560 million euros, less than half of the previous year's figure. In China, Mercedes delivered 86,800 vehicles between July and September. That is 31 percent less than a year earlier. Over the course of the year, market conditions “became even more challenging, especially in China,” explained CEO Ola Källenius.

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On Tuesday, Mercedes-Benz had already lowered its expectations for the full year 2026 in view of the difficulties in China. The group now expects an adjusted return on sales for the passenger car division of two to three percent. Mercedes had previously promised three to five percent. When it comes to pre-tax profit, the car manufacturer now expects earnings to be at the same level as the previous year, instead of the forecast improvement.

"In addition to the increasingly challenging market environment in China, the Mercedes-Benz Group expects higher costs in the fourth quarter, including higher material costs," the company said. When presenting its half-year figures in July, Mercedes had already revised its sales forecast downwards due to the problems in China. In the second quarter, sales on the Chinese market fell by 30 percent.

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In view of the ongoing weak sales, Mercedes wants to review its positioning in China. As the largest car market in the world, the country will remain a pillar of the premium manufacturer's strategy, said Källenius. However, the market is developing worse than expected, including in the luxury segment. “The behavior of the market was difficult to understand,” said the CEO. Mercedes wants to report on the concrete plans at the beginning of next year.

CFO Harald Wilhelm explained that the company wanted to become more independent of China as a source of profit. Because German car manufacturers are under considerable pressure in the People's Republic. Consumer sentiment remains weak. At the same time, European companies are competing with Chinese manufacturers, who often offer electric cars at significantly lower prices. Competition from China is also growing in Europe. Mercedes wants to meet her with attractive vehicles, said Källenius: "We will take the bull by the horns and play our game."

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Despite the problems in China, Källenius pointed to positive developments in other markets. According to its own information, Mercedes recorded sustained sales growth in Europe and the USA. Sales of purely electric cars also developed positively there.

In the third quarter, sales of fully electric vehicles rose by 52 percent to more than 78,000 units compared to the same period last year. “Our new models are well received by our customers,” says Källenius.

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In addition to the development of new models and consistent cost control, other business areas are also helping Mercedes to cushion the burden. “Consistent cost discipline and strong earnings contributions from Mercedes-Benz Vans and Mercedes-Benz Financial Services are helping us to cushion the headwind,” said the CEO.

The van business achieved an operating profit of 397 million euros in the third quarter. The return on sales was 9.4 percent. Financial services also developed positively. The division's operating profit rose to 445 million euros.

The consolidated result, including special factors, more than doubled to 1.77 billion euros from July to September. The adjusted group EBIT, which did not take restructuring expenses and other one-off effects into account, fell by 15 percent to 1.78 billion euros.

This topic in the program: BR24 Radio | News | Oct 28, 2026 | 08:43 amtagesschau.de | Weak China business depresses Mercedes-Benz profits | 10/28/26 | 9:05 a.m