Mercedes-Benz has lowered its 2026 profit guidance, becoming the last of Germany’s three largest automakers to warn of pressure from falling sales in China. It now expects its core cars division to post an adjusted return on sales of 2% to 3%. Its previous forecast was 3% to 5%. The company cited intensifying competition in China and higher material costs expected in the fourth quarter.
BMW and Volkswagen have also cut their profit forecasts in recent months, pointing to a deteriorating market in China, long a key market for German automakers. Both face a sharp contraction in sales and intense price competition from domestic rivals.
The downgrades highlight a strategic challenge for Germany’s auto industry: weaker profits in China leave companies with less funding for investment in new technology and restructuring.