Mercedes and Porsche Squeezed by U.S. Tariffs and Slowdown in China

New York Times

30-07-2025

The luxury automakers Mercedes-Benz and Porsche slashed their forecasts for earnings this year as the double whammy of President Trump's tariffs and slowing demand in China hit the German companies hard.
Mercedes said on Wednesday that revenue in 2025 would come in 'significantly below' last year. The company also lowered its projection for profit margins.
The automaker reported a plunge in profit in the first half of the year, more than halving from the year before. Its vehicle sales fell 6 percent in the United States and 14 percent in China over that period, 'primarily due to tariff policy,' the company said.
Porsche, which is controlled by Volkswagen, also cut its earnings outlook on Wednesday. It was the third time this year that the automaker scaled back its forecast. The company said its profit plunged roughly two-thirds in the first half of the year, hit by 400 million euros ($462 million) in tariff costs.
Porsche is especially exposed to U.S. tariffs, because all of its vehicles are produced in Europe and shipped from there. The company is also under pressure from rivals in China, where demand for its high-end cars has collapsed.
Porsche's deliveries in North America rose in the first six months of the year, in part because dealers accelerated orders to get ahead of tariffs and Porsche offered to keep prices steady despite the levies. Its sales in China, however, fell nearly 30 percent, the carmaker said, citing 'intense competition.'
German automakers faced a 27.5 percent tariff for vehicles destined for the United States for much of the second quarter. On Sunday, the European Union agreed to a trade deal with the United States that would reduce tariffs on imported cars to 15 percent, which Mercedes and Porsche incorporated into their forecast cuts. American cars shipped to Europe would face no duties under the deal.
For Mercedes, which builds its popular S.U.V.s at a plant in Tuscaloosa, Ala., and ships them back to Europe, zero E.U. tariffs on American-made vehicles could be beneficial, executives said.
'It is not a gift to the U.S.A.,' Harald Wilhelm, the company's chief financial officer, said of the U.S.-E.U. trade deal that many considered lopsided in favor of the Americans. Some aspects of the agreement 'will help, not hurt us,' Mr. Wilhelm noted.
But the cars built in Alabama are also shipped to China, where they faced tariffs as high as 100 percent for much of the spring, before a truce between Washington and Beijing was reached in May. That compounded the company's problems in China, which accounted for around a third of the automaker's sales so far this year.