Mercedes-Benz cuts 2026 profit outlook amid China market struggles

German luxury carmaker Mercedes-Benz lowered its 2026 financial forecast on Tuesday, 27 October, pointing to difficult market conditions in China and rising material costs. It is the third major German automaker to reduce its full-year outlook this year, underlining the wider pressure on the industry.

Mercedes-Benz now expects its core profit in 2026 to stay roughly flat at about €5.8 billion. It had previously forecast an increase of at least 15%. The company also cut its expected profit margin for its core car business to 2–3%, from an earlier range of 3–5%.

Third-quarter figures

The company released preliminary third-quarter results showing core profit of €1.77 billion and a 2.5% profit margin in its car division. Full third-quarter results are due on Wednesday.

Following the announcement, Mercedes-Benz shares dropped by more than 4%. Volkswagen and BMW shares each fell by about 2%.

Pressure across the sector

BMW and Volkswagen have already reduced their own full-year forecasts. Weak demand and fierce competition from Chinese rivals such as BYD and Xiaomi continue to weigh on industry profits. Mercedes-Benz's car deliveries in China fell a further 29% in the first nine months of 2026, after reaching their lowest level since 2016 last year.

Chief executive Ola Kallenius has urged German employees to work extra hours without additional pay, while the company expands production in Hungary, where he says costs are about 70% lower than in Germany. Volkswagen, meanwhile, plans to cut 120,000 jobs worldwide by the end of the decade. That would be the largest restructuring in automotive history, exceeding the 50,000 jobs lost after General Motors' bankruptcy in 2009.