Mercedes-Benz saw its 2025 earnings take a steep dive, with earnings before interest and taxes (EBIT) dropping more than 50%. The luxury automaker’s financial performance was battered by rising U.S. tariffs, slumping demand in China, and mounting global economic pressure.
As reported by Reuters’ Rachel More on February 12, 2026, and echoed by CBT News, Mercedes posted a 57% decline in profit over the previous year. The sharp fall was driven in part by punitive import tariffs that undercut sales in North America. Meanwhile, in China—the world’s largest auto market—the premium segment cooled significantly. Economic uncertainty and a growing threat from domestic automakers like BYD have made the landscape more competitive than ever.
Mercedes also continues to grapple with ongoing supply chain challenges and rising raw material costs. The brand’s pivot to electric vehicles and software-defined architectures has added further strain, compressing margins without delivering the scale needed to offset the investment.
The disappointing results highlight the fragility of the luxury auto sector in today’s volatile market. They also contrast sharply with moves by rivals like Nissan, which on the same day lowered its full-year loss forecast thanks to aggressive cost-cutting.
During the earnings call, CEO Ola Källenius called 2025 a “challenging environment” and laid out plans for accelerated cost reductions. The company is aiming for €10 billion in savings by 2027. Källenius also reaffirmed Mercedes’ commitment to expanding its EV lineup and investing in software capabilities, critical areas as the brand races to future-proof its business.
Analysts view the earnings miss as a clear warning sign. Some suggest it could force Mercedes to explore deeper partnerships or ramp up localized production to buffer against geopolitical and trade risks.
The report, summarized in the February 12 update from the International Organization of Motor Vehicle Manufacturers (OICA), reflects broader industry turbulence. Automotive News Europe had flagged similar concerns as early as February 9.
What makes this story especially notable is the scale of the decline. EBIT fell below €10 billion, a dramatic drop from previous highs. The miss has shaken investor confidence in legacy luxury brands, particularly as they navigate the costly and complex shift toward sustainable mobility.
