Mercedes-Benz, the renowned German car manufacturer, announced on Wednesday that it recorded its lowest annual profit since the onset of the COVID-19 pandemic, with a net profit of 5.3 billion euros ($6.3 billion) for the fiscal year 2025. This figure represents a significant drop of nearly 49% from the previous year's profit, although it surpassed the expectations set by analysts at financial data firm FactSet. The company faced numerous challenges, including the impact of US tariffs and intense market competition in China, which have put considerable strain on its profitability.

Despite the financial downturn, CEO Ola Kaellenius expressed a cautious optimism, noting that the results were still within the company's guidance amidst a "dynamic market environment." He highlighted the potential for recovery, citing the planned launch of over 40 new models in the next three years, which is seen as a crucial part of the firm's strategy to regain competitiveness in the global market. Furthermore, Mercedes-Benz projects a similarly challenging year in 2026 but anticipates a core profit that will be "significantly above" the figure reported for 2025, as the company works through restructuring processes.

The core car business of Mercedes-Benz expects a profit margin to stabilize this year between three to five percent, a sign of cautious recovery yet still indicative of the challenging landscape they operate in. The company’s plans to rejuvenate its product lineup and strengthen its market position are pivotal as it navigates external pressures from tariffs and heightened competition. The outcome of these strategic initiatives will be critical as Mercedes navigates through this transformative phase in the auto industry, especially with upcoming electric vehicle trends and evolving consumer preferences.