Mercedes-Benz Beats Profit Margin Forecasts in Third Quarter 2025

BERLIN/FRANKFURT (October 29, 2025) — German luxury automaker Mercedes-Benz Group AG posted stronger-than-expected results for the third quarter of 2025, as a surge in premium model sales boosted margins and helped cushion the financial impact of restructuring costs and slowing Chinese sales.

The company reported a 4.8% return on sales in its core automotive division, slightly above the 4.7% achieved last year and well ahead of analysts’ average forecast of 3.9%, according to Visible Alpha data.

This performance was driven primarily by a 10% increase in sales of top-end vehicles, including high-margin Maybach, AMG, and G-Class models — a segment that continues to deliver strong profits despite global economic pressures and rising competition.

---

Premium Sales Offset Layoff Charges and China Weakness

Mercedes’ operating profit fell by 70% year-on-year, weighed down by one-off costs related to job cuts and a major restructuring program aimed at saving €5 billion globally by 2027.

However, robust demand for luxury models and disciplined cost management allowed the company to maintain healthy profitability, generating €1.4 billion ($1.6 billion) in free cash flow during the quarter.

This strong liquidity position prompted Mercedes to resume its share buyback program, signaling management’s confidence in the company’s financial resilience.

“We are steering the company through a challenging business environment,” said Ola Källenius, Mercedes-Benz CEO. “Tariffs, intense competition in China, and the transition to electric mobility are all shaping our current strategy.”

---

Mercedes Navigates Global Headwinds with Strategic Focus

Mercedes continues to face headwinds across its key markets:

• U.S. tariffs are putting pressure on export profitability.
• Hyper-competition in China, driven by aggressive local automakers, is denting luxury vehicle demand.
• Europe’s strict emissions regulations are accelerating the costly shift toward electric vehicles (EVs), which carry lower margins than traditional combustion models.

Despite these challenges, Källenius emphasized a long-term strategy of adapting production and cost structures to local markets — particularly in China — while maintaining premium brand positioning.

“We do not intend to join a price war in China,” Källenius said. “Instead, we are focused on efficiency, localized production, and technology innovation to win customers.”

---

Investor Confidence Lifts Mercedes Shares

Following the earnings release, Mercedes-Benz shares jumped 6%, reaching a seven-month high by mid-morning trading in Frankfurt. Analysts, including Deutsche Bank’s Tim Rokossa, praised the company’s execution, noting that management was “clearly delivering on what was promised.”

The company’s ability to protect margins amid restructuring signals that Mercedes is well-positioned to manage the EV transition and navigate volatile global market conditions.

With top-end models continuing to outperform, Mercedes-Benz remains focused on sustainable profitability, technological leadership, and shareholder value creation.