Mercedes-Benz announced a significant decline in its net profit, which fell by 48.8% to 5.3 billion euros last year, the lowest level since the onset of the COVID-19 pandemic in 2020. Factors contributing to this decline include a drop in sales in the crucial Chinese market and a considerable reduction in profit margins per vehicle. The company shared these figures on Thursday, highlighting the ongoing challenges it faces in maintaining profitability amidst increasing competition.

The luxury automaker reported a 9% decrease in revenue, which totaled 132.2 billion euros, alongside a 9% decrease in vehicle sales, which amounted to 1.8 million cars. The operating profit before interest and taxes saw an even steeper decline of 57%, totaling 5.82 billion euros. The impact of global trade has also played a role, with U.S. tariffs rising to 15% under Donald Trump's administration adversely affecting Mercedes' exports, even with a production facility located in Alabama.

In addition to these financial struggles, Mercedes-Benz is increasingly challenged by domestic competitors in China, particularly by brands like BYD, which have become well-established in the electric mobility sector. The company reported a 9% decrease in electric vehicle sales, highlighting the pressure it faces to innovate and compete against local brands that are gaining market share. As a result, the outlook for Mercedes-Benz remains uncertain as it navigates this competitive landscape and the implications of trade policies that impact its operations.