Mercedes-Benz revised its sales and revenue outlook downward for 2026, citing mounting challenges in the Chinese market that have significantly impacted its earnings in the region. The German luxury automaker now projects a slight decline in unit sales compared to the previous year, along with a modest drop in group revenue, revising its earlier forecast that had anticipated stable sales and revenue figures.
The company attributed this revision primarily to intense price competition within China’s premium and luxury vehicle segments, particularly from local manufacturers, which it said is expected to suppress unit sales for many foreign brands. During the second quarter, Mercedes-Benz recorded a substantial impairment charge of €704 million ($800.3 million) related to its Chinese operations. This charge contributed to a sharp fall in earnings before interest and taxes (EBIT) for the car segment in China, which dropped to €49 million from €783 million year-over-year. The company emphasized that this impairment did not involve a corresponding cash outflow.
Mercedes-Benz’s car sales in China declined by approximately 30% in the second quarter, a decrease that offset gains achieved in other global markets. The company cited a combination of factors driving the downturn, including fierce local competition, cautious consumer spending, ongoing model transitions, and the wider geopolitical and trade uncertainties that continue to disrupt the sector. Additionally, the impact of the Middle East conflict has exacerbated these existing uncertainties, although Mercedes-Benz’s forecast for the remainder of the year assumes the conflict will not escalate significantly.
Despite the setbacks in China, Mercedes-Benz reported a second-quarter EBIT of €1.55 billion, up from €1.27 billion in the same period last year, while revenue declined 3.3% to €32.06 billion. The results slightly exceeded analysts’ expectations, who had predicted €1.51 billion in EBIT on €31.88 billion in revenue. The company also reported an adjusted return on sales of 4% for its car division, down from 5.1% a year earlier.
Looking ahead, Mercedes-Benz plans to introduce more than 40 new models globally between 2025 and 2027, which it expects will help drive future growth. The automaker is also intensifying productivity initiatives, particularly focused on its manufacturing facilities in Germany, as part of a broader strategy to improve efficiency and competitiveness amid challenging market conditions.