Mercedes cuts 2026 profit guidance as China woes weigh on German automakers

Mercedes-Benz cut its 2026 profit margin outlook on Tuesday, citing weaker conditions in China and higher ‌fourth-quarter costs, in the latest sign of mounting pressure on German carmakers in their key market. Its shares fell as much as 5.5%, and were down around 4% ‌as of 0955 GMT.

The German premium automaker now expects an adjusted return on sales ‌of 2%-3% in 2026, down from its previous guidance of 3% to 5%. The company also cut its 2026 group operating profit guidance, now expecting earnings to be broadly flat year-on-year rather than ⁠significantly higher.

The ​warning comes as ⁠German carmakers continue to struggle in China, the world's largest auto market, where slowing demand and intense ⁠competition from local manufacturers are eroding sales and pricing power. Mercedes' core car sales fell 8% ​year-on-year in the third quarter, hit by weak demand in China.

Rivals BMW ⁠and Volkswagen also cut their outlooks earlier this year, blaming, in part, the worsening situation in China. Metzler ⁠analyst ​Daniel Schwarz said China was the main reason for the weak performance of German carmakers.

Mercedes, like BMW, remains heavily exposed in China. By contrast, Porsche, which ⁠reported a profit rebound on Tuesday, has reduced its dependence on China and is ⁠pushing the ⁠brand further into the luxury segment, making it less vulnerable to competition from Chinese manufacturers expanding into Europe and other markets, Schwarz ‌said.