Mercedes cuts 2026 revenue outlook as China sales slide 30%

Mercedes-Benz Group AG reported a 22% rise in second-quarter operating profit to €1.5 billion, slightly below analyst estimates, and cut its full-year revenue outlook as a deepening luxury slump in China drove a 30% sales decline in the region.

"Despite a demanding market environment, we remained on track in the second quarter while continuing to advance our product launch programme," Chief Executive Officer Ola Kaellenius said, vowing further cost-cutting measures in the second half of the year.

Group earnings before interest and taxes came in at €1.5 billion ($1.71 billion), below the average analyst estimate of €1.6 billion compiled by Visible Alpha. Revenue fell 3.3% to €32.1 billion from €33.2 billion a year earlier. Net profit rose 13.5% to €1.09 billion, or €1.14 per share, from €957 million.

The group result was supported by strong earnings at Mercedes-Benz Financial Services and the vans division, as well as a €131 million gain linked to the planned sale of its Athlon leasing subsidiary. Adjusted EBIT, which excludes impairment charges and one-time items, reached €2.3 billion, up from €2 billion a year earlier.

Metric	Q2 2026	Q2 2025	Change
Group Revenue	€32.1B	€33.2B	-3.3%
Group EBIT	€1.5B	€1.3B	+21.5%
Cars Adj. RoS	4.0%	5.1%	-1.1pp
Vans Adj. RoS	10.2%	10.4%	-0.2pp

Mercedes-Benz Cars posted adjusted EBIT of €909 million, down 26% from €1.23 billion, with the adjusted return on sales slipping to 4.0% from 5.1%. The division recorded €704 million in impairment charges tied to Chinese equity-method investments, which did not result in a corresponding cash outflow. Total car sales fell 7.9% to 417,765 units, with China — the company's largest single market — dropping 30%. Excluding China, global car sales rose 2%.

Battery-electric vehicle sales jumped 51% to 52,852 units, led by 87% growth in Europe, where order intake for BEVs more than doubled. The company is in the midst of its largest-ever product launch program, with more than 40 new models planned between 2025 and 2027, including the all-new electric C-Class and GLA.

Mercedes-Benz Vans delivered adjusted EBIT of €454 million, up 2.9%, with an adjusted return on sales of 10.2%. The financial services unit posted adjusted EBIT of €492 million, a 70% surge, driven by higher portfolio margins and lower operating expenses. Its adjusted return on equity jumped to 15.3% from 8.9%.

The company now expects full-year car sales and group revenue to come in slightly below the prior-year level, having previously forecast a stagnation. It raised its xEV share forecast to 23% to 25% from 21% to 23% and lifted its financial services return-on-equity guidance to 12% to 14% from 10% to 12%. Free cash flow of the industrial business fell 41% to €1.1 billion in the quarter, reflecting about €1.1 billion in severance payments tied to the Next Level Performance cost-cutting program.

The guidance cut signals that management expects the China headwinds to persist through year-end. Investors will watch the second-half delivery trajectory for the new S-Class and electric GLC, which are expected to support volumes as the product cycle ramps up.

This article is for informational purposes only and does not constitute investment advice.