Mercedes-Benz posted a 2025 net profit drop of 49% to 5.3 billion euros as revenue and sales declined amid headwinds in China, tariff pressure, and exchange-rate effects, with a 9% fall in group revenue to 132.2 billion euros and a 57% plunge in operating income before interest and taxes to 5.82 billion euros.

To counter the downturn, the company cut costs by more than 3.5 billion euros in the passenger car division and pursued a broad savings program targeting 10% reductions in production costs and 10% in fixed costs by 2027, including severance for indirect staff.

Management reiterates that the results are within guidance and emphasizes efficiency, speed, and flexibility as the operating framework, with CEO Ola Källenius signaling a new offensive to restore profitability and growth.

Mercedes previews a product offensive with seven world premieres over the next ten weeks, including the CLA, GLC facelift, GLS, and an electric C-Class, aiming to roughly double EV sales and lift luxury-vehicle volumes in the next 2–3 years.

Mercedes delivered 1.8 million vehicles in 2025, including 169,000 fully electric and 268,000 top-end models, while 2026 guidance remains cautious on margins despite stable revenue.

For 2026, the automaker projects revenue around the prior year level, with core operating margin in the 3–5% range and EBIT clearly above 2025, as one-off restructuring charges taper off.

The company emphasizes ongoing employee recognition, with a continued performance bonus payout in 2025 and jubilee shares, while management and works council stress appreciation for staff amid a challenging market.

The outlook remains cautious in early 2026, with updates on the ongoing transformation and cost-control efforts in the face of global headwinds.

External pressures include US tariffs on Rastatt production, intensified Chinese competition, and currency effects, all contributing to earnings weakness.

The savings plan includes layoffs in indirect areas outside manufacturing as part of broader restructuring to improve efficiency, speed, and flexibility.

Executives expect a potential turnaround starting in 2027, aided by investments in driver-assistance systems and automated driving as growth areas.

Analysts describe the period as an 'one-in-a-hundred-years transformation' for the auto industry, underscoring tariff headwinds, China price competition, European demand stagnation, and EV-capability investments.