Mercedes Sees Earnings Drop Over Tariffs, China Competition
The German manufacturer now expects a carmaking margin of as low as 4% this year, below the at least 6% it had projected before withdrawing its outlook due to Trump's trade moves. The duties are weighing on prices and sales, and Mercedes warned that group revenue will come in significantly below last year's level.
The mounting trade hurdles add to a deeper structural challenge in China, where a fierce EV price war led by domestic automakers is hurting margins. Mercedes has struggled to gain traction there with its more expensive models like the EQS, the battery-powered version of its flagship S-Class limousine. The likes of BYD Co. are also expanding in Europe's stagnant auto market.
Mercedes' carmaking margin halved to 5.1% in the second quarter after unit sales fell 9%. The company also cited significantly lower demand for vans and declining revenue for its mobility business.
The luxury-car maker is among companies heavily exposed to tariffs. Mercedes faced 27.5% in levies on cars shipped from the European Union to the US for much of the second quarter. It also exports sport utility vehicles made at its Alabama plant to China, where they faced local levies well above 100% early last quarter before a mid-May trade truce lowered them to roughly 35%.
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