Mercedes-Benz cuts 2026 profit outlook on tough China market

German carmaker Mercedes-Benz has reduced its profit forecast for 2026 due to challenging conditions in China and increased material costs, according to a statement made on Tuesday. The company now anticipates its core profit for the year to match the 5.8 billion euros ($6.5 billion) from the previous year, a decrease from an earlier forecast of a minimum 15 percent increase.

Core car business profit margins are now projected to be between two and three percent for the year, a drop from the previously anticipated three to five percent range.

Mercedes-Benz is the final major German automaker to adjust its annual outlook, following in the footsteps of BMW and Volkswagen, which both cited weakness in China. This slowdown in China is a significant concern for the global automotive industry, as it is the world's largest car market. In the nine months leading up to September, Mercedes-Benz vehicle deliveries in China experienced a further 29 percent decline.

The company attributes this decline to the ongoing economic slowdown in China, as well as increased competition from local rivals like Xiaomi and BYD. These domestic automakers have gained market share, further exacerbating Mercedes-Benz's challenges in the Chinese market.