The balance sheets of the global auto industry are beginning to read like obituaries.

For Mercedes-Benz, the latest earnings are not merely disappointing—they are diagnostic. They expose an industrial order straining under the combined weight of geopolitical tariffs, technological disruption and the relentless rise of Chinese electric vehicle manufacturers.

Mercedes now forecasts its core automotive margin will sink to between 3 and 5 per cent in 2026, a stark descent from the fat years when premium branding insulated profits. The company’s earnings before interest and tax collapsed 57.2 per cent to €5.8bn, while net profit fell nearly half. Sales in China — once the dependable engine of German luxury — plunged 19 per cent, a number that reads less like a cyclical dip and more like a structural warning.

The company insists salvation lies ahead: cost cuts, localisation in China, and a coming wave of 40 new models. But the arithmetic is unforgiving.

Tariffs imposed under Washington’s trade posture siphoned roughly €1bn from results, while currency shifts carved out even more. The premium strategy that once promised resilience is losing altitude in thinner air.

What emerges from these results is not a temporary downturn but a deeper realignment. Chinese manufacturers, armed with scale, state backing and vertical integration in batteries and software, are compressing the margins of legacy automakers that once dominated by brand alone.

The old order is not yet finished. But it is clearly under siege — and the numbers, stripped of corporate optimism, are beginning to tell the story plainly.