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German automaker Mercedes-Benz Group reported a 57% slide in annual profit, citing tariff expenses, competitive pressure in China and currency headwinds.
The company absorbed roughly €1 billion ($1.2 billion) in tariff-related costs during the year. Shares moved lower in early trading following the announcement.
German luxury carmaker Mercedes-Benz Group on Thursday posted a sharp fall in full-year earnings, underscoring mounting strain from global trade barriers and intensifying rivalry in key markets.
The Stuttgart-based automaker recorded operating profit of €5.8 billion ($6.9 billion) for 2025, marking a 57% decline compared with the previous year and falling short of analyst forecasts. The company attributed the downturn to foreign exchange pressures, fierce competition in China and approximately €1 billion ($1.2 billion) in tariff costs that weighed on performance.
"Amid a dynamic market environment, our financial results remained within our guidance, thanks to our sharp focus on efficiency, speed and flexibility," said Chief Executive Ola Källenius in a statement accompanying the results.
European carmakers are navigating a challenging landscape defined by rising production expenses, lingering supply chain bottlenecks, regulatory demands and a complex shift toward electric mobility. Mercedes' latest figures highlight how trade tensions and competitive dynamics continue to squeeze margins across the sector.
Shares of the Munich-listed group fell in morning dealings, extending losses seen earlier this year. The stock has declined notably since January as investors assess the outlook for global demand and profitability.
Looking ahead, Mercedes-Benz said it plans further cost-saving measures in 2026 alongside a wave of new model launches. The company is targeting an adjusted return on sales for its passenger car division of between 3% and 5%, compared with around 5% achieved in 2025.
Revenue for 2025 totaled €132.2 billion, and the automaker expects sales in the current year to remain broadly in line with that level. Group earnings before interest and taxes are forecast to come in significantly above the prior year, while free cash flow from the industrial business is projected to be slightly below last year's €5.4 billion.
