German luxury car manufacturer Mercedes-Benz Group on Thursday reported a steep drop in full-year profit and warned of challenging times ahead, following a year marred by intense competition from Chinese rivals and global tariff costs.
The automaker posted full-year operating profit of 5.8 billion euros ($6.9 billion) in 2025, reflecting a 57% drop from a year ago. The result was significantly lower than analyst expectations of 6.6 billion euros.
Mercedes-Benz Group said its earnings were shaped by foreign exchange headwinds and competition in China, alongside a reported 1 billion euro ($1.2 billion) hit in tariff costs.
“Amid a dynamic market environment, our financial results remained within our guidance, thanks to our sharp focus on efficiency, speed, and flexibility,” Ola Källenius, chairman of the board of management at Mercedes-Benz Group, said in a statement.
Mercedes-Benz Group said it planned further cost cuts in 2026 as well as a flurry of product launches, seeking to hit an 8% to 10% profit margin at its auto division.
Shares of the Munich-listed company fell 5.3% during morning deals.
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