The global market environment has been completely transformed by tariffs, trade wars, and technological leaps, Källenius said on Thursday. "We are fundamentally reinventing the company." He sees the group in a "rock-solid" position, with more than €30 billion in liquidity, describing it as a "position of strength." For the current year, Mercedes-Benz is targeting sales and passenger car deliveries at last year's level: €132 billion in revenue and 1.8 million vehicles. Increased sales in Europe and the US are expected to offset the shortfall in China. After a roughly 70 percent collapse since the record year of 2022, operating profit is set to rise significantly for the first time. The ongoing product offensive, with more than 40 new models in the coming years, is intended to boost sales. The new CLA is already resonating with customers. Källenius places major hopes on the recently refreshed flagship S-Class, as the luxury sedan brings margins of up to 20 percent, according to analysts.
However, a return to pre-crisis sales of two million cars is only in sight in the medium term, the company stated. The same applies to the previously targeted car margin of 8 to 10 percent from 2027 onwards. Here, a deterioration is even possible. The adjusted margin shrank by three percentage points in 2025. For 2026, Mercedes-Benz is only forecasting three to five percent. In the record year of 2022, the Stuttgart automaker earned over 14 percent. Back then, Källenius considered this level permanently achievable, but had already abandoned that hope a year ago. CFO Harald Wilhelm explained that the US import tariff, which has risen to 15 percent, and the negative effects of a strong euro continue to dampen results.
The gloomy outlook triggered a nearly six percent drop in the company's share price on the stock market. "Tariffs, a weak dollar, and problems in the China business are taking their toll," summarized analysts at Raiffeisen Research. "Even the much-praised luxury segment is suffering."
NEW MANTRA
Under the pressure of the crisis, Mercedes-Benz is changing its pricing policy. Sales will initially be stabilized through discounts, Wilhelm explained. "We want to strengthen competitiveness through pricing," he said. The company must adapt to market realities. The previous mantra of "value over volume" was not reaffirmed by management. This had meant keeping prices high rather than lowering them to boost volumes. Källenius said the focus is now on "profitable growth." New China chief Oliver Thöne admitted to yielding somewhat to the intense price pressure there, though not as "aggressively" as other competitors.
Cost savings of more than €3.5 billion compensated for part of last year's headwinds, the company added. The reduction of thousands of jobs in Germany outside of production resulted in €1.6 billion in severance costs, but Wilhelm expects this to pay off quickly. He did not provide a figure for the number of departing employees. However, this year only 85,000 employees covered by collective agreements are eligible for a profit-sharing bonus of up to €3,139—down from 91,000 the previous year.
Cost reductions are ongoing, the CFO said. As previously announced, production capacity in Western Europe, mainly in Germany, will be reduced by 100,000 units to 900,000. In Hungary, where production costs are significantly lower, the Kecskemet plant will double its capacity to 400,000. The GLB SUV will be built there in the future, as the joint plant with Nissan in Mexico is being closed. "In every respect, it is more attractive to invest in Eastern Europe than in Western Europe," Källenius said. Yet Mercedes-Benz remains committed to Germany. After all, the company sells only about twelve percent of its vehicles here, but invests more than 50 percent of its capital and employs over 60 percent of its 164,000-strong workforce in Germany.
All in all, the brand with the star earned €5.3 billion in 2025—about half as much as the previous year. However, the dividend will not be cut as sharply as the market expected: a payout of €3.50 per share is proposed, down from €4.30 the year before.
(Contributions by Rachel More, edited by Ralf Banser. For inquiries, please contact the editorial management at frankfurt.newsroom@thomsonreuters.com)
- by Ilona Wissenbach
