Mercedes-Benz Strikes Upbeat Tone Despite Little Cheer From China — Update

By Joshua Kirby

Mercedes-Benz said it is confident of booking a recovery in its operating earnings, despite a slide in first-quarter revenue and profitability, as the group hopes a swathe of new auto models can help it boost sluggish sales.

The German maker of luxury autos made earnings before interest and taxes of 1.9 billion euros ($2.23 billion) in the first three months of the year, it said Wednesday. That was 17% lower than in the same period last year.

Revenue fell 4.9% on year to 31.60 billion euros, while the adjusted operating margin in the mainstay cars business slid to 4.1% from 7.3% previously. The group pointed to a challenging market backdrop colored by heated competition and headwinds from geopolitics and trade issues.

China, once a key engine of growth for the company, continues to offer little comfort.

"In China, intense competition and subdued demand continued to weigh on the market amid a transition year marked by model changeovers across the portfolio," the company said.

Mercedes-Benz last year booked a sharply reduced profit as its margins contracted and sales in China slid. President Trump's trade tariffs, some of which were targeted directly at auto makers, also weighed on financial performance.

Mercedes-Benz nevertheless said it remains confident of booking an operating profit for 2026 "significantly above" last year's level. That will "primarily reflect restructuring charges incurred in the prior year," the company said. Revenue is expected to be roughly flat on year.

The group is in the midst of a tranche of launches it calls its largest ever, with more than 40 new models hitting showrooms between last year and next. The plan is "gaining momentum in its ramp-up year," the company said.

New vehicle launches should in the longer term boost the adjusted operating margin in its core business back to 8%-10%, from 5% in 2025, the company said earlier this year.

The group meanwhile said it was monitoring the Middle East conflict's potential impact on consumer confidence. Analysts have warned that the conflict could increase costs for auto makers. But finance chief Harald Wilhelm said the group was maintaining tight cost control in order to shore up its bottom line.

"Strong demand for our new products and healthy order books position us well for improved momentum in the second half of the year," Wilhelm said.

Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby

(END) Dow Jones Newswires

April 29, 2026 01:47 ET (05:47 GMT)