In 2025, Mercedes-Benz announced a drastic reduction in its net profit, which fell to 5.3 billion euros, nearly 49% lower than the year before. This decline marks the company's lowest annual earnings since the onset of the COVID-19 pandemic. The automaker is also anticipating similar challenges in 2026, with revenue expected to remain at around 132.2 billion euros, consistent with the previous year, but profit margins are projected to decrease to between three and five percent.

The firm cites several core issues impacting their performance, primarily a sharp decline in sales in China, stagnant demand in Europe, and significant investments in electric vehicles that have not seen corresponding demand. This downward trend in profitability raises concerns about the company's operational strategy in the face of changing market dynamics and increased competition in the automotive sector. The challenges posed by tariffs imposed by the U.S. on foreign automakers have only added to the volatility of the market that the German manufacturer must navigate.

Given its long history that dates back to 1885, the situation poses significant implications for Mercedes-Benz, not only in terms of financial performance but also in terms of strategic direction. As global trends shift towards greener technologies and electric mobility, how Mercedes-Benz adapts to these changes, particularly in key markets like China and Europe, will be crucial for its future profitability and sustainable growth.