Mercedes-Benz Faces a Sharp Profit Drop: 31% Decline Driven by U.S. Tariffs and Weak Chinese Market

Despite the setback, the German automaker keeps its 2025 outlook intact. CEO Ola Källenius downplays the situation, focusing on efficiency, innovation, and customer experience.

Mercedes-Benz reported a 31% year-on-year drop in net profit for the third quarter of 2025, falling to €1.19 billion, compared with €1.71 billion a year earlier. Revenue declined by 7% to €32.15 billion, while adjusted EBITDA slid 17% to €2.1 billion.
The brand attributes the slump to weaker sales in China and higher U.S. import tariffs, which have weighed heavily on profit margins. It’s a sign that even the most established European luxury brands are not immune to global trade and economic pressures.

Källenius: “Our Annual Targets Remain on Track”

Despite the disappointing figures, Mercedes-Benz CEO Ola Källenius has played down the downturn, insisting that “third-quarter results are consistent with our full-year projections.” The Swedish executive emphasized that the company’s product launch schedule remains on course, while maintaining a strong focus on efficiency and customer satisfaction.
In addition, Mercedes is moving forward with its €2 billion share buyback program, approved earlier this year, a clear statement of confidence aimed at reinforcing investor trust and long-term stability.

China and the U.S.: Mercedes-Benz’s Biggest Headaches

In China, sales dropped by 27%, largely due to intensified competition from local automakers such as BYD and Xiaomi, who are dominating the electric vehicle segment with aggressive pricing and rapid innovation. Meanwhile, higher tariffs in the United States continue to challenge European exports.
This dual front of pressure underscores the fragile state of the European automotive industry, already struggling with sluggish sales, soaring energy costs, and uncertain regulations. As Chairman of the European Automobile Manufacturers’ Association (ACEA), Källenius has urged European leaders to develop a unified industrial strategy to stay competitive in a rapidly evolving market.

Europe Looks for Urgent Solutions Amid an Industry in Crisis

The European Commission, led by Ursula von der Leyen, has convened top automotive executives for another crisis meeting in Brussels this Friday — the third and final one this year — as part of the “Strategic Dialogue on the Future of the Automotive Industry.”
The goal is to address whether Europe can maintain its position in global manufacturing as the balance of power shifts toward Asia and North America. The central question remains: can these talks prevent the long-feared decline, or is Europe’s automotive dominance approaching its end?

Driving Toward a More Inclusive and Sustainable Future

While challenges remain, Mercedes-Benz and its peers are rethinking what progress means in today’s mobility landscape. Innovation must go hand in hand with sustainability, accessibility, and inclusivity, ensuring that the transition to cleaner, smarter vehicles benefits everyone.
As electrification accelerates and new technologies reshape the industry, a collective, global effort will be key — one that includes manufacturers, policymakers, and consumers alike — to build an automotive future that’s fair, green, and forward-looking.