Mercedes-Benz, long a symbol of German industrial supremacy and the polished illusion of permanence, is discovering what all mega corporations eventually learn: the numbers no longer bend to prestige.
The company announced that profit margins in its core car division are expected to shrink further in 2026, falling to between 3% and 5%, down from 5% in 2025.
This is not merely an accounting adjustment. It is a measure of contraction — of an industry straining under the weight of tariffs, rising costs, currency tremors, and the slow unravelling of the Chinese growth miracle on which it had come to depend.
Operating profit at the group level collapsed to €5.8 billion in 2025, less than half the previous year and well below market expectations.
A billion euros were consumed by tariffs alone — the modern instruments of economic warfare — while competition in China, once the wellspring of German automotive wealth, has become merciless. The era of easy expansion is over.
In response, Mercedes speaks the language corporations adopt in times of retrenchment: “efficiency,” “flexibility,” “discipline.” These words translate into job cuts begun in 2025, slimmer production lines, and a strategic shift toward lower-cost manufacturing hubs such as Hungary.
The promise of new product launches accompanies the austerity, as if innovation can anaesthetise structural decline.
Revenue in 2026 is expected to stagnate at roughly the same level as 2025’s €132.2 billion. Yet the company insists earnings before interest and tax will rise significantly, a claim that rests less on growth than on contraction — on squeezing more from less.
What we are witnessing is not simply a difficult year for a luxury carmaker. It is the pressure exerted on industrial Europe by a fractured global order, by protectionism, by the erosion of the Chinese market that once underwrote its prosperity.
The sheen of the luxury badge remains. But beneath it lies an industry navigating a harsher landscape, where prestige offers no immunity from economic gravity.
