Mercedes-Benz Q1 profit falls 17% as China sales slide

Mercedes-Benz reported a 17% year-on-year drop in operating profit for the first quarter of 2026, posting 1.9 billion euros ($2.22 billion) as pressure in China weighed on results.

The German luxury carmaker said the decline was driven mainly by tougher competition and tariff-related headwinds in China. Even with the fall, the figure came in above analyst expectations of 1.6 billion euros.

China competition and tariffs weigh on a key market

Mercedes-Benz said its performance in China deteriorated during the quarter, with sales down 27%. The company described China as a critical market and linked the weaker trend to intensifying competitive dynamics.

Officials pointed to the growing strength of local electric-vehicle makers, including BYD and Nio, which are increasingly pushing into the premium segment and challenging established luxury brands.

Car division margin narrows but stays within guidance range

In its car division, Mercedes-Benz reported a first-quarter margin of 4.1%, down from 7.3% a year earlier. The company said the result remained within its expected full-year range of 3% to 5%.

Management said it plans to respond through tighter cost controls and a stepped-up product cadence. The company said it is aiming to build stronger momentum in the second half of the year.

New model pipeline includes electric CLA and updated S-Class

Mercedes-Benz is scheduled to roll out 40 new models between 2025 and 2027. The planned launches include the all-electric CLA sedan and an updated S-class range.

The company framed the model program as part of its effort to defend its position in the premium market while navigating shifting demand and competitive pressure, particularly in China.

Guidance reaffirmed; mid-term margin target unchanged

Chief Financial Officer Harald Wilhelm said Mercedes-Benz is maintaining its 2026 guidance. He said the company expects group EBIT to be significantly higher than the 5.8 billion euros recorded in 2025.

Mercedes-Benz also reiterated its mid-term target of 8% to 10% margins for its core car business. The company did not provide additional figures in the update, and it remains unclear how quickly the planned cost measures and upcoming launches will offset the current pressure in China.