Mercedes hit by tariff costs as 2025 earnings more than halve
The Mercedes star, the brand logo of vehicle manufacturer Mercedes-Benz, rotates above the building of a Mercedes-Benz car dealership.
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German luxury car manufacturer Mercedes-Benz Group on thursday reported It reported a sharp decline in full-year profit and warned of challenging times ahead, following a year marred by intense competition from Chinese rivals and global tariff costs.
The automaker reported full-year operating profit of 5.8 billion euros ($6.9 billion) in 2025; This reflects a 57% decrease from the previous year. The result was significantly below analysts’ expectations of 6.6 billion euros.
Mercedes-Benz Group said its earnings were shaped by currency fluctuations and competition from China, as well as a reported 1 billion euro ($1.2 billion) hit in tariff costs.
“In a dynamic market environment, our financial results remained within our guidance thanks to our focus on efficiency, speed and flexibility,” Ola Källenius, chairman of the board of directors of the Mercedes-Benz Group, said in a statement. he said.
Mercedes-Benz Group said it plans multiple product launches as well as further cost cuts in 2026 and targets adjusted return on sales of 3% to 5% for Mercedes-Benz Cars, down from the 5% growth it reported in 2025.
Shares of the Munich-listed company fell 5% in morning trading. The stock is down about 7% so far this year.
Looking ahead, Mercedes-Benz Group said it expects revenues to come in at the previous year’s level, after reporting revenue of 132.2 billion euros in 2025, while the group’s earnings before interest and tax (EBIT) are expected to be “significantly above” the previous year’s level.
Group free cash flow from the company’s industrial businesses is seen to be just below the 2025 level of 5.4 billion euros.
The results come as European auto giants face a host of challenges, from rising production costs to supply chain disruptions, from regulatory pressures to the electric vehicle transition.
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