Mercedes-Benz has revised its financial outlook for the year, attributing the downgrade to a significant decline in its Chinese market, which is crucial for the company. The automaker now expects its main car unit’s returns to be between 7.5% and 8.5%, down from the previous forecast of up to 11%.

Premium models like the S-Class and Maybach have seen falling sales in China due to the country’s economic slowdown, particularly the real estate slump.

Mercedes Benz CEO Ola Källenius has promised to take action, including launching new products in China, to counteract the downturn. This profit warning adds to the broader challenges facing Germany’s automotive industry, which is dealing with declining demand, a slow transition to electric vehicles, and waning profits from China.

Other German automakers are also feeling the pressure. Volkswagen recently abandoned a long-standing labor agreement and may close German factories, while BMW has similarly lowered its earnings expectations.

In addition, Mercedes’ electric vehicle sales have struggled, especially among younger Chinese drivers, who are increasingly choosing domestic brands with superior in-car technology.

The issues extend beyond China, with European sales also under pressure. Mercedes’ deliveries in the region fell 13% in August, and automakers are at risk of substantial fines if they fail to meet the EU’s tightening emissions standards.

Amid this crisis, Germany’s Economic Minister Robert Habeck is hosting a summit to discuss potential solutions.