Mercedes-Benz Group AG became the latest European automaker to slash its profit outlook as deteriorating demand in China and rising input costs squeeze margins.
Shares tumbled in European trading this morning as the auto industry as a whole confronts intensifying Chinese competition, softening demand, and ongoing cost pressures.
"Mercedes-Benz Group AG today updated its full-year 2026 outlook for Mercedes-Benz Cars and the Mercedes-Benz Group. In addition to an increasingly challenging market environment in China, Mercedes-Benz Group expects higher costs in the fourth quarter, including higher material costs," Mercedes wrote at the start of the update.
The struggling automaker now expects an adjusted operating margin of 2% to 3% in its core cars division this year, compared with as high as 5% stated in a previous forecast. Group earnings before interest and tax are forecast to be roughly flat.
Add Mercedes to the growing list of European automakers sounding the alarm about soft demand in China and a tough operating environment overall. Volkswagen and BMW have recently warned about worsening conditions in China.
UBS markets analyst Eva Kindt wrote earlier
