Mercedes-Benz gives muted outlook after tariffs; costs more than halve 2025 profits

By Rachel More

STUTTGART, Germany, Feb 12 (Reuters) – Mercedes-Benz on Thursday said the profit margin at its autos division could fall further this year, indicating tough months ahead as the luxury carmaker grapples with high costs, a tough Chinese market and global tariffs.

The car division’s adjusted return on sales is expected to be 3% to 5% in 2026, after 5% in 2025.

Shares in the company were indicated 3.7% lower in pre-market trading at 0708 GMT.

At the group level, the company’s operating profit more than halved to 5.8 billion euros ($6.9 billion) in 2025, a year marred by 1 billion euros in tariff costs plus difficulties in the cutthroat China market and negative currency effects.

This was below the 6.6 billion euro forecast from a Visible Alpha poll.

MERCEDES-BENZ WARNS OF RELENTLESS COST DISCIPLINE

Mercedes-Benz plans further cost cuts and product launches, hoping to reach an 8% to 10% profit margin at its auto division through “relentless cost discipline.”

Mercedes has been seeking to reduce its fixed costs through job cuts initiated in 2025 while also targeting slimmer production, including with a stronger focus on its plant in Hungary.

“Amid a dynamic market environment, our financial results remained within our guidance, thanks to our sharp focus on efficiency, speed, and flexibility,” CEO Ola Kaellenius said.

In 2026, the company expects group revenue at the prior-year level, after reporting 132.2 billion euros in 2025, and EBIT significantly above the 2025 result.

($1 = 0.8431 euros)

(Reporting by Rachel More; Editing by Ludwig Burger and Thomas Derpinghaus)