China slump forces a rethink, not a retreat
CEO Ola Källenius said China is "deteriorating beyond what we had thought would happen this year," with pressures intensifying in the second half. The squeeze is most acute in high-end models, long a rich-margin stronghold for Mercedes.
Mercedes' deliveries to China dropped 31% in the third quarter versus a year ago, reaching a multi-year trough amid softer luxury demand, fiercer price wars, and stronger local rivals.
The numbers and the near-term stance
Mercedes is in the thick of its biggest product and cost reset in years. Third-quarter revenue declined 4.5% to €30.7 billion, and group EBIT on an adjusted basis dropped 15%. Within Mercedes-Benz Cars, adjusted profit plunged to €560 million - less than half of last year's level - while margins narrowed to 2.5% from 4.8% due to softer China results along with currency and launch expenses.
A day ahead of earnings, the company lowered its guidance, blaming a deeper China downturn and rising expenses. The stock eased by under 1% in Frankfurt on Wednesday following a 3.9% decline on Tuesday, leaving it more than one-third lower year to date.
When industries rethink strategy, attentive investors can spot changing opportunities. We're hosting our first ever investor livestream on 11/17 to show you how to use ChatGPT and Claude to invest like a pro, hosted by Briefs Finance CEO Jaspreet Singh. Save your seat.
How the plan shifts in China
Mercedes is reassessing its product lineup, pricing, sales setup, manufacturing, procurement, and tech footprint in China, with a more comprehensive plan targeted for 2027. The goal is to fix the economics without chasing volume at any price. Källenius rejected a "fire sale market-share-at-all-cost" approach adopted by some rivals.
Cost cuts, product offensive, and industry context
Mercedes is targeting around 8% material-cost savings versus 2024, with substantially deeper reductions in China, and is trimming an industrial footprint built for higher volumes. In Germany, voluntary redundancy programs are reducing headcount. Over 40 newly launched or updated models are scheduled by the close of 2027, with the electric CLA and GLC arriving now and refreshed C-Class, S-Class, GLE, and GLS intended to rekindle demand.
CFO Harald Wilhelm said the push from new models should get even stronger in 2027, paired with ongoing cuts to variable costs. He declined to forecast China's position by that point, noting a better view should emerge with the full-year results in February.
The bottom line: expect stricter cost discipline, more local tailoring, and realistic pricing in China, with bigger proof points from 2027. For portfolios, track margins in Mercedes-Benz Cars, China volume and pricing, and the launch cadence versus cost cuts into that February update.
New approaches and tools often reveal subtle signals worth following for advantage. On 11/17, our CEO Jaspreet Singh goes live for our first ever investor livestream on how to use ChatGPT and Claude to invest like a pro. Register to join him.
