Mercedes-Benz Profit Slips 17%, Bets on New Models to Rebound

Mercedes-Benz is asking investors to judge whether its recovery will come from real demand for fresh metal or from tighter cost control alone. The German luxury carmaker’s first-quarter operating profit fell 17% to €1.904 billion, while its carmaking margin dropped to 4.1% from 7.3% a year earlier, a sharp reminder that premium pricing is under strain.

The quarter was still better than many analysts had feared, but the numbers showed how much pressure the business is absorbing. Group revenue slipped 5% to €31.602 billion, and Mercedes-Benz Cars posted adjusted EBIT of €933 million. The company said higher raw-material costs, tariff pressure and intense competition all weighed on results, adding to a more difficult trade backdrop and a weaker Chinese market.

The regional split suggests the slump is not purely cyclical. Mercedes-Benz Cars sold 419,400 vehicles in the quarter, with Europe up 7% and the United States up 20%, offset in part by a steep decline in China. Separate reporting put China sales down 27%, underscoring how much of Mercedes’ recent softness is tied to one market where local competitors and slowing premium demand have been squeezing foreign brands. Total group sales of cars and vans fell 6% to 499,700.

That leaves the company leaning heavily on product cadence. Mercedes-Benz said its largest-ever launch plan will bring more than 40 new models between 2025 and 2027, with a heavy burst in 2026. The lineup includes the new S-Class, EQS, GLS and Mercedes-Maybach S-Class, along with the all-new electric C-Class, new GLE and GLE Coupé, the all-new CLA and GLB in electrified combustion and fully electric versions, and the all-new electric VLE van. Management is betting that a fuller portfolio can restore pricing power just as the company tries to stabilize sales in difficult markets.

Mercedes-Benz still has room to maneuver. Free cash flow in the industrial business came in at €1.857 billion, and net liquidity rose to €33.809 billion at March 31, even after €469 million in share buybacks. Harald Wilhelm, Christina Schenck and Ola Källenius all reaffirmed full-year guidance, pointing to a constructive sales outlook outside China, strong order intake for new electric models and continued cost efficiency gains. The test now is whether the next wave of launches can do more than defend margins and actually reignite demand.