Financial Results of Mercedes-Benz: Profit Increased, but Auto Business in China Collapsed
Mercedes-Benz announced a 13.5% increase in net profit in the second quarter of 2026 — from €957 million to €1.09 billion. However, behind this positive dynamics lies a serious crisis: the company suffered significant losses in China, which was previously its main growth engine.
Crisis of the Automotive Division
The adjusted EBIT of the Mercedes-Benz Cars automotive division amounted to €909 million in the reporting quarter. This occurs against the backdrop of the company’s largest-ever new model launch program. Despite introducing several new products to the Chinese market, including the CLA, Mercedes was unable to persuade local buyers not to choose new Chinese brands.
The reported EBIT of the automotive division fell by almost 94% compared to last year — from €783 million to just €49 million. This collapse was caused by China, as this figure includes an asset impairment of €704 million related to Chinese investments using the equity method. Despite this, the company states:
The Chinese market and customers in China remain extremely strategically important for Mercedes-Benz.
Collapse of Sales in China
Although Mercedes-Benz demonstrated stability in many key markets, it was China that pulled down the overall results. In the second quarter, Mercedes-Benz Cars sold 417,765 vehicles, significantly fewer than the 453,674 a year earlier. The main reason is China, where local sales collapsed by 30%.
For comparison: European sales grew by 4%, and in the US by 10%. Excluding China, global sales of Mercedes-Benz cars even increased by 2% year-on-year.
Real Drivers of Profit
The main source of profit for Mercedes-Benz in the second quarter was not the automotive division or vans, but Mercedes-Benz Financial Services. Its adjusted EBIT soared by 70% to €492 million, thanks to higher portfolio margins and lower operating expenses. The total contract volume increased by 2.2% due to expansion in the US and favorable exchange rates. In addition, the group’s overall profit was boosted by €417 million in proceeds from the partial sale of its stake in Daimler Truck.
This situation indicates a deep structural problem: while the financial sector and one-off deals save the overall balance, the company’s core auto business is losing ground in the world’s largest automotive market. Chinese consumers are increasingly choosing local brands that offer modern technology and electric vehicles at competitive prices. For Mercedes-Benz, this is a challenge that requires not only new models but also a revision of its presence strategy in a region where the German automaker was previously the undisputed leader.