Mercedes-Benz cuts profit forecast as Chinese rivals put pressure on German carmakers

Mercedes-Benz has reduced its profit forecast for 2026, citing challenging conditions in China as the primary driver. The German carmaker now anticipates core profit to match last year's 5.8 billion euros (R108 billion), falling short of the 15% growth it had initially projected. Core profit margins for the car business are now projected to range between 2% and 3%, a drop from the previous 3% to 5% range. Shares of Mercedes-Benz fell 4.2% following the profit outlook revision.

Volkswagen and BMW have also revised their 2026 guidance downwards, with both companies reporting weaker demand and intense competition from Chinese rivals like BYD and Xiaomi. The decline in Chinese market share has taken a toll on the German car industry, which is a major employer in Germany. Mercedes-Benz CEO Ola Kaellenius has called for German workers to work overtime without pay, while simultaneously expanding the company's manufacturing presence in Hungary, where operational costs are about 70% lower than in Germany.

Mercedes-Benz reported a core profit of 1.77 billion euros for the third quarter, with a profit margin of 2.5% in the cars business. The company expects to report full third-quarter results on Wednesday.