Automaker Mercedes-Benz has started the year with a further decline in sales due to a slump in China. From January to March, the Swabian group sold just over 419,000 vehicles in its core Mercedes-Benz Cars division, a six percent decrease compared to the same period last year, the company announced on Thursday. In China, the brand with the three-pointed star suffered a 27 percent drop in sales to 111,600 units. In the world's largest automotive market, the manufacturer of premium and luxury vehicles is struggling with weak demand and fierce competition.

The DAX-listed group explained that the market environment in China remains challenging. The phase-out of several models ahead of upcoming generation changes also dampened sales. "2026 is a transition year for Mercedes-Benz in China, significantly shaped by changeovers in several key models," the company stated. Mercedes aims to win over customers with state-of-the-art, tailored infotainment systems.

MIDDLE EAST CONFLICT WEIGHS

Excluding China, sales would have risen by five percent, the automaker highlighted. Indeed, other major markets performed better: in the US, sales increased by 20 percent to 81,100 units, despite significantly higher import tariffs complicating business. Top-tier models were particularly in demand. "In the future, the company will focus even more strongly on product localization and value creation in this region." In Europe, sales climbed by seven percent to over 158,000 cars. Electric vehicles, in particular, sold better thanks to new models, showing 34 percent growth compared to a weak previous year.

The conflict involving Iran weighed on the first quarter, affecting the important Gulf State market. Mercedes-Benz had invested heavily in distribution there in recent years. Weaker demand contributed to the decline in sales outside the three major global regions.

The Vans division moved just over 80,000 vehicles in the first three months, down three percent. Van chief Thomas Klein is hoping for momentum from the new VLE large-capacity van for private customers.

Sales chief Mathias Geisen expressed confidence for the current year. Order intake is significantly exceeding expectations, such as orders for the new S-Class. The order books for the new E-models CLA, GLB, and GLC are filled well into the second half of the year. "With the increasing availability of our new products, we are focusing on converting strong customer interest into positive sales momentum in the coming months," Geisen explained. This year, passenger car sales for the brand are expected to remain at the previous year's level, following a nine percent decline to 1.8 million cars in 2025.

(Report by Ilona Wissenbach, edited by Philipp Krach. For inquiries, please contact the editorial management at frankfurt.newsroom@thomsonreuters.com)