Mercedes-Benz reported a 22% increase in second-quarter operating profit on Tuesday despite continued weakness in its Chinese market. However, the German luxury carmaker warned that vehicle sales and revenue could decline during 2026.
The company posted earnings before interest and tax (EBIT) of €1.5 billion in the second quarter. Although the figure missed analysts’ expectations of €1.6 billion, it reflected stronger financial performance compared with last year.
Mercedes also revised its 2026 outlook, forecasting that car sales and group revenue would fall slightly below previous levels. Earlier, the company had expected both indicators to remain broadly unchanged.
Cost-Cutting Measures Support Earnings
The company’s financial services and vans divisions delivered strong performances during the quarter. In addition, Mercedes recorded a €131 million gain from the planned sale of its leasing subsidiary, Athlon.
Chief Executive Officer Ola Kaellenius said the company remained on track despite a challenging global market. Moreover, he pledged to introduce further cost-cutting measures during the second half of the year.
Mercedes said lower administrative and research spending also contributed to improved earnings. Consequently, the company’s profitability strengthened despite ongoing market pressures.
China Weakness Continues to Challenge Automaker
Like rivals Volkswagen and BMW, Mercedes continues restructuring its cost base to address rising challenges. Increasing tariff costs, stronger Chinese competition and pressure on German production sites remain key concerns.
The automaker said it had intensified global productivity measures in June. Furthermore, the latest initiative places particular emphasis on improving efficiency at its German manufacturing facilities.
Mercedes noted that fixed costs have already fallen by 25 percent since 2019. The company expects additional efficiency measures to support its long-term competitiveness despite slowing demand in China.
