Mercedes-Benz Group posted a 4.4% year-on-year decline in third-quarter revenue to 30.7 billion euros, as a challenging Chinese market and fierce competition weighed on deliveries and profitability, according to Chinese automotive outlet First Electric (D1EV), citing a report from Gasgoo.
The Stuttgart-based automaker said on October 28 that its third-quarter earnings before interest and taxes (EBIT) came in at 1.77 billion euros, up 136% from a year earlier. Net profit rose 27.7% to 1.52 billion euros. However, the sharp EBIT increase was flattered by a low base: in the same period last year, Mercedes-Benz booked 750 million euros in one-off charges related to job cuts and legal disputes. Excluding such items, adjusted EBIT fell 15% year on year to 1.78 billion euros, a clear sign of underlying pressure.
China drags on car sales
The passenger car division saw adjusted EBIT drop to 560 million euros from 1.14 billion euros a year earlier, and its cash flow swung negative. Global deliveries of passenger cars fell 8% year on year to 407,200 units in the quarter, a decline Mercedes-Benz attributed to the difficult market environment and intensifying competition in China.
Just one day before releasing the results, Mercedes-Benz cut its full-year guidance for adjusted return on sales in the passenger car division, lowering it to 2-3% from a previous 3-5%. The company cited continued pressure in the Chinese market, higher raw material costs in the fourth quarter, and increased expenses related to its product cycle.
The results underscore how German luxury automakers are feeling the squeeze from China's fast-moving EV market, where domestic players such as BYD, Nio and Xpeng are aggressively launching new models and competing on price and technology. Mercedes-Benz has been responding with its own electric lineup, including the EQ series of BEVs (battery-electric vehicles), but has faced an uphill battle to maintain margins while defending market share.
Outlook remains cautious
The company's revised guidance suggests management expects the headwinds to persist through the rest of the year. The combination of China's price war, rising input costs and the cost of refreshing its model range is likely to keep pressuring profitability in the near term.
Mercedes-Benz's experience mirrors that of other European automakers, which have seen their once-dominant position in China's premium segment eroded by local brands offering advanced software, longer electric ranges and faster charging networks. While the German group still holds a strong brand name globally, its ability to translate that into profitable sales in China will depend on how quickly it can adapt to the market's shift toward electrification and digital features.
