Mercedes-Benz to recall 11,895 vehicles in the US over fire hazard, NHTSA says | ReutersSkip to main content[Exclusive news, data and analytics for financial market professionalsLearn more aboutRefinitiv]Item 1 of 2 The Mercedes-Benz logo is seen at the 43rd Bangkok International Motor Show, in Bangkok, Thailand, March 22, 2022. REUTERS/Athit Perawongmetha/File Photo[1/2]The Mercedes-Benz logo is seen at the 43rd Bangkok International Motor Show, in Bangkok, Thailand, March 22, 2022. REUTERS/Athit Perawongm ...

Mercedes-Benz on Thursday said its 2025 earnings were more than halved on a massive $1.2 billion hit related to President Trump’s tariffs – and warned that more challenges are on the way.The luxury German automaker’s full-year operating profit was 5.8 billion euros, or roughly $6.9 billion – a roughly 57% drop from 2024. It largely missed Wall Street expectations of $7.8 billion.Mercedes blamed the dismal results on steep costs from Trump’s auto tariffs and intense competition from foreign rivals, especiall ...

Core Viewpoint - Mercedes-Benz Group CEO Ola Kaellenius emphasized a shift in strategy from "value over volume" to a focus on "profitable growth" to reassure investors [1]. Group 1: Company Strategy - The company is transitioning its mantra to prioritize profitable growth, indicating a potential retreat from its previous strategy of prioritizing value over volume [1]. - This strategic shift aims to enhance investor confidence and align with market expectations for sustainable profitability [1].

Core Insights - Mercedes-Benz reported a 57% drop in full-year operating earnings for 2025, highlighting challenges from competition in China and high tariffs [1] - The company's earnings before interest and taxes (EBIT) were 5.8 billion euros ($6.88 billion), significantly below the forecast of 6.6 billion euros and down from 13.6 billion euros the previous year [1] - Revenue for the year was 132.2 billion euros, a 9% decrease year-on-year, and slightly below the expected 134 billion euros [1] Financial Performance - Operating earnings fell to 5.8 billion euros, a 57% decline compared to the previous year [1] - Revenue decreased to 132.2 billion euros, down 9% from the prior year [1] - The EBIT forecast was missed by 0.8 billion euros, indicating a more challenging financial environment than anticipated [1] Market Environment - The company faces stiff competition in the Chinese market, which has impacted its earnings [1] - High tariffs have added to the financial pressures on the company, contributing to the significant drop in earnings [1] - CEO Ola Kaellenius emphasized the company's focus on efficiency, speed, and flexibility in navigating a dynamic market environment [1]

Market Performance - Huawei's ultra-luxury Maextro S800 sedan is outselling Porsche AG's Panamera and Mercedes-Benz Group AG's S-Class in China [1] - Huawei's Maextro S800 sedan is outselling all other vehicles with sticker prices of at least $100,000 in China [1]

Core Points - The European Union is proposing to soften emissions rules for new cars, effectively scrapping a ban on combustion engines due to pressure from the automotive industry [1][3] - The proposal allows carmakers to slow the rollout of electric vehicles (EVs) in Europe, aligning the region more closely with the US, where efficiency standards are being relaxed [2][3] - The new regulations will require a 90% reduction in tailpipe emissions by the middle of the next decade, compared to the previous goal of 100% reduction [5] Industry Impact - The proposal is expected to be adopted by EU commissioners and will undergo discussions in the European Parliament and EU Council, with potential amendments from each institution [6] - Environmental groups express concern that the changes may create loopholes that undermine Europe's climate ambitions and hinder European manufacturers in competing with Chinese brands in the EV market [8][9] - The automotive industry, particularly German manufacturers, has lobbied for these changes to protect jobs and ease political tensions amid increasing competition and trade tariffs [10][11] Market Dynamics - Sales of new battery-electric cars have slowed, particularly in Germany, due to the withdrawal of purchase incentives, although growth is recovering with some subsidies returning [12] - The uptake of EVs varies significantly across Europe, with pure EV registrations accounting for 35% of sales in the Netherlands compared to only 8% in Spain [13] - The proposal package includes measures to boost the uptake of small electric vehicles made in Europe, including a 10-year exemption from certain safety and emissions requirements [14]

Core Viewpoint - The European Union is considering softening its rules that would have banned new combustion-engine vehicles by 2035, potentially allowing for a five-year extension or even removing the ban entirely [1][4]. Group 1: Regulatory Changes - The EU is discussing loopholes that could lead to a five-year extension of the combustion-engine vehicle ban [1][4]. - The EU plans to reduce regulatory burdens and provide incentives for small electric cars manufactured in the region [1][4]. Group 2: Industry Response - Intense lobbying from major automotive companies like Stellantis NV and Mercedes-Benz Group AG has influenced the EU's decision to reconsider the ban, as these companies sought to mitigate the risk of substantial fines exceeding ₹1 billion ($1.2 billion) in the coming years [3][4]. - Major auto-producing countries, particularly Germany, have advocated for changes to alleviate political tensions and the potential for job losses in the automotive sector [3][4].

Core Viewpoint - Mercedes-Benz Group AG is facing significant financial challenges, including a decline in earnings and revenue, attributed to economic weakness in China and U.S. import tariffs, despite maintaining its guidance and a relatively low valuation compared to its earnings [2][3][4]. Financial Performance - Earnings per share reported at $1.43, falling short of the estimated $1.77 [2][6] - Revenue generated approximately $37.72 billion, slightly below the anticipated $38.60 billion [2][6] - A significant 70% decline in third-quarter operating profit [3] Valuation Metrics - Price-to-earnings (P/E) ratio approximately 7.65, indicating a relatively low valuation compared to earnings [4][6] - Price-to-sales ratio at about 0.37, suggesting low stock price relative to sales [5] - Enterprise value to sales ratio approximately 0.89 and enterprise value to operating cash flow ratio around 5.97 [5] Financial Ratios - Earnings yield at about 13.07%, indicating a return on investment for shareholders [5] - Debt-to-equity ratio approximately 0.95, showing a moderate level of debt compared to equity [5] - Current ratio about 1.32, indicating good liquidity to cover short-term liabilities [5]

Core Insights - Mercedes-Benz is experiencing significant challenges in its key markets, particularly in China and the U.S., leading to a decline in global sales [1][4][6] Sales Performance - Global auto sales for Mercedes-Benz fell by 12% year over year in the third quarter [4] - In China, car deliveries dropped by 27% due to adverse market conditions, including a 1.5% decrease in luxury spending [5] - U.S. shipments decreased by 17% during the same period, attributed to 25% auto tariffs, although demand remains strong [6][7] Market Conditions - The Chinese luxury market is estimated to have declined by as much as 20% in 2024 [6] - Despite the challenges, U.S. sales year to date are still 6% higher compared to the previous year [7] Product Demand - Demand for the electric CLA sedan contributed to a 22% sequential increase in global sales [8] - The top-selling models in the U.S. include the GLE SUV, GLC SUV, and C Class, among others [9]

Core Insights - Automakers are reassessing the technology they incorporate into vehicles, with a focus on practicality over novelty, as evidenced by recent decisions from companies like Tesla, Mercedes-Benz, and Audi [1][10][11] Group 1: Technology Reassessment - Tesla is working on combining electronic and manual door handles to improve safety and usability, indicating a shift towards more practical solutions [1] - Mercedes-Benz has reverted to a traditional volume control system in the GLC SUV after customer feedback indicated dissatisfaction with the newer haptic version [2][11] - The automotive industry has a history of introducing innovations that later become obsolete, such as automatic shoulder belts and oversized display keys, highlighting the need for careful consideration of new technologies [5][6][10] Group 2: Customer-Centric Approach - Executives from various automakers are now emphasizing the importance of listening to customer preferences, as seen in Mercedes-AMG's response to feedback regarding engine configurations [11][13] - Audi is simplifying its production process and reducing the complexity of its offerings, focusing on what truly matters to customers, such as fewer steering wheel configurations and intuitive design [14][15] Group 3: Market Dynamics - The automotive industry faces challenges such as disappointing electric vehicle sales and market turbulence, prompting a more introspective approach to technology adoption [10][11] - As high-tech features become standard across all vehicle price points, automakers must differentiate their products without overwhelming customers with unnecessary technology [9][10]