Core Viewpoint - Mercedes-Benz Group reported a significant decline in revenue and net profit for Q2 2025, indicating challenges in the automotive market, particularly in the transition to electric vehicles [1][5]. Financial Performance - Q2 2025 revenue was €33.153 billion, down 9.8% from €36.743 billion in the same period last year [1][5]. - Net profit for Q2 2025 was €0.957 billion, a drastic decrease of 68.7% compared to €3.062 billion in Q2 2024 [1][5]. - For the first half of 2025, total revenue was €66.377 billion, down 8.6%, and net profit fell by 55.8% to €2.688 billion [5]. Sales Performance - Total vehicle sales in Q2 2025 were 547,100 units, a 9% decrease year-over-year [6]. - In China, sales dropped 19% to 140,400 units in Q2 2025 [6][11]. - The sales of battery electric vehicles (BEVs) were particularly weak, with a decline of 18% to 41,900 units in Q2 2025 [6][8]. Market Challenges - The decline in sales is attributed to a shrinking market for fuel vehicles, weak pricing, negative currency impacts, and reduced contributions from joint ventures [5]. - The company is facing increased competition from domestic electric vehicle brands in China, which are gaining market share [11][12]. Dealer Network Adjustments - Mercedes-Benz has been closing several authorized dealerships in response to declining sales, with reports of over 100 dealers potentially being cut [9][10]. - The company aims to optimize its dealer network in China to improve profitability amid challenging market conditions [10][11].

Core Insights - Mercedes-Benz is facing significant challenges in the Chinese market, with a total of 16,100 vehicles recalled due to safety and emission risks, following a previous recall of 33,400 vehicles in May [1][3] - The company's sales in China have declined, with 683,600 units sold in 2024, a decrease of 7.3% year-on-year, and 152,800 units in the first quarter of 2025, down 10% year-on-year [1][3] - To combat declining sales, Mercedes-Benz has been reducing prices across its key models, with discounts reaching up to 120,000 yuan for certain models [2][3] Sales Performance - The C-Class, GLC, and E-Class are the main sales pillars for Mercedes-Benz in China, with significant price reductions implemented to stimulate demand [2][3] - The sales decline is also reflected in the financial performance of Beijing Benz, which reported a revenue of 21.747 billion euros in 2024, down 3.36% year-on-year, and a net profit of 2.443 billion euros, down 18.5% year-on-year [3] Market Competition - The rise of domestic brands has intensified competition, with domestic brands capturing 64% of the retail market share in the first five months of 2024, an increase of 7.9 percentage points year-on-year [3][4] - The penetration rate of new energy vehicles (NEVs) among domestic brands reached 74.6%, while Mercedes-Benz's NEV penetration remains low at 6.4% for mainstream joint venture brands [4] Electric Vehicle Strategy - Mercedes-Benz's electric vehicle sales are lagging, with only 185,000 units sold globally in 2024, a decrease of 23% year-on-year, and 45,500 units in the first quarter of 2025, down 10% year-on-year [4][5] - The company plans to launch a significant number of new products from 2025 to 2027, including 36 new models, with a focus on both internal combustion and electric vehicles [8][9] Investment and Development - Mercedes-Benz has committed to increasing its investment in China, with plans to introduce multiple dedicated products covering all market segments and drive types from 2025 to 2027 [9] - Since 2019, the company has invested 10.5 billion yuan in R&D in China, focusing on electrification and intelligence, establishing the largest R&D network outside Germany [9] Competitive Landscape - Compared to other multinational automakers, Mercedes-Benz's localization of electric vehicles appears slower, with competitors like BMW and Audi making larger investments in local partnerships and production [11][13]