Mercedes-Benz Sees Nearly 70% Profit Decline Amid Tariffs and Weak China Sales

Khabor Wala Desk

Published: 30th July 2025, 4:56 PM

Mercedes-Benz Sees Nearly 70% Profit Decline Amid Tariffs and Weak China Sales

Picture: Collected

Mercedes-Benz, the premium German automotive manufacturer, reported a dramatic decline in second-quarter profits, citing US tariffs and sluggish sales in China as primary contributors. The firm has now adjusted its full-year revenue outlook to reflect the turbulent geopolitical and trade climate.

Financial Figures – Q2 2025

Metric	Figure
Net Profit	€957 million
Analyst Expectation (FactSet)	€1.5 billion
Revenue (Cars Division)	€24.2 billion
Actual Profit Margin (with tariffs)	5.1%
Adjusted Profit Margin (without tariffs)	6.6%

Mercedes-Benz stated that the US-imposed tariffs, which added a 25% levy on imported vehicles, significantly affected margins, costing the car division hundreds of millions of euros in lost profitability.

CEO Ola Källenius described the earnings as “robust” in light of the complex trading conditions and emphasised the strategic use of Mercedes’ global production footprint to navigate emerging challenges.

“We’re adapting to new geopolitical realities by using our global production footprint intelligently.”
— Ola Källenius, CEO, Mercedes-Benz

Regional Sales Declines

Market	Sales Volume Decline
United States	-12%
China	-19%

The company continues to face strong competition in China, particularly from local EV giants such as BYD, which has been capturing significant market share in recent months.

Revised 2025 Outlook

Mercedes-Benz has now downgraded its full-year forecast, with groupwide revenue projected to fall significantly below the €146 billion earned in 2024. This marks a steep revision from February’s more modest guidance, which suggested revenue would be only slightly lower year-on-year.

The company also updated its expected profit margin for the cars division:

Profit Margin Guidance (Cars Division)	Including Tariffs	Excluding Tariffs
New Forecast	4% – 6%	6% – 8%

In April, Mercedes-Benz and other major automakers temporarily withdrew their guidance in response to the tariff escalation led by former US President Donald Trump, whose policy aims to promote domestic manufacturing but has proven detrimental to European car exports.

The current figures underscore the increasing pressure on global automotive firms to recalibrate strategies in the face of trade wars, shifting consumer trends, and intensifying regional competition.