Mercedes-Benz: Why the Star is Currently Fading - Mercedes-Benz battles profit slump as China sales collapse by 19%

Mercedes-Benz is facing a sharp decline in profits and car sales. The company's global deliveries dropped by 9% in 2025, with an even steeper fall of 19% in China. To counter this downturn, a major cost-cutting plan has been launched to restore profitability by 2027.

The company's struggles became clear in early 2025 when profits halved in the first nine months of the year. Revenue also shrank by 8%, adding to the pressure. Despite high-profile events to showcase new models, sales continued to slide.

China, once a key market, has seen Mercedes' share drop from 3.2% in 2020 to just 2.5% by 2025. Local rivals like BYD, Li Auto, and Nio have surged ahead, with BYD dominating over 60% of the electric vehicle market by 2024. Fierce competition and aggressive pricing from these brands have pushed Mercedes further behind.

External challenges have worsened the situation. U.S. tariffs under President Donald Trump and high labour costs in Germany have squeezed margins. The company's early shift to all-electric vehicles and misjudging the chip shortage during the pandemic also added to its difficulties.

Analysts remain cautiously optimistic, predicting a recovery by 2027. However, Mercedes will need to fight to keep its premium status in an increasingly competitive market.

Mercedes has set a 2027 target to return to profitability through strict cost-cutting measures. The road ahead remains tough, with strong rivals in China and ongoing economic pressures. The company's ability to adapt will determine whether it can hold its position as a leading premium carmaker.