Mercedes Profit Takes a Hit, Yet Confidence Soars
Mercedes-Benz Group AG has reported a sharp 30.8% year-over-year decline in net profit for the third quarter of 2025, landing at €1.19 billion . Despite this setback—primarily driven by slumping sales in China and ongoing U.S. tariff pressures—the luxury automaker has defied expectations by maintaining its full-year financial outlook and announcing a bold €2 billion ($2.15 billion) share buyback program over the next 12 months .
Why Did Mercedes’ Profit Drop?
The profit slump stems from multiple headwinds:
- China Sales Collapse: Deliveries in China—the world’s largest auto market—plummeted by 27%, marking the steepest quarterly decline in recent memory .
- Tariff Turbulence: U.S. import tariffs on European-made vehicles continue to squeeze margins .
- Volume Decline: Global vehicle sales dropped 12.3% to just 441,453 units in Q3, dragging revenue down 6.9% year-over-year to €32.1 billion .
Mercedes’ Silver Lining: Premium Models Shine
While mass-market segments struggled, Mercedes’ high-end lineup—including the S-Class, G-Wagon, and AMG performance models—saw improved demand. This shift toward more profitable vehicles helped the company achieve stronger-than-expected adjusted EBIT margins of 6.5% in its Cars segment .
Strategic Move: $2 Billion Share Buyback
In a show of financial strength and shareholder confidence, Mercedes announced a €2 billion share repurchase initiative. This move signals management’s belief that the stock is undervalued despite macroeconomic headwinds .
Looking Ahead: Full-Year Forecast Holds Firm
Despite the Q3 dip, Mercedes-Benz reaffirmed its 2025 guidance for group EBIT margin between 10% and 12%. The company remains optimistic about its electric vehicle (EV) ramp-up and cost-cutting measures, including workforce reductions and supply chain optimizations.
Key Q3 2025 Financial Metrics
| Metric | Q3 2025 | YoY Change |
|---|---|---|
| Net Profit | €1.19 billion | -30.8% |
| Revenue | €32.1 billion | -6.9% |
| Vehicle Sales | 441,453 units | -12.3% |
| China Sales | — | -27% |
What This Means for Investors
The buyback and steady outlook suggest Mercedes is weathering the storm better than peers. Analysts note that the company’s focus on premium pricing and operational discipline could insulate it from further downturns in volatile markets like China.
Sources
- The New York Times: Mercedes Reports a Drop in Profit but Maintains Forecast
- Mercedes-Benz Q3 2025 Earnings Reports
