Mercedes-Benz Reports Profitability Decline, Cites Tariff Concerns

BERLIN: Mercedes-Benz announced a decrease in the profitability of its car division for the first quarter on Wednesday. The company also cautioned that tariffs could adversely affect its earnings for the entire year, leading the luxury automaker to retract its financial outlook due to trade uncertainties.

The profit margin for the car segment was reported at 7.3%, a reduction from the 9% recorded during the same period last year.

Group earnings before interest and taxes (EBIT) experienced a substantial decline, plummeting by 41% year-over-year to 2.3 billion euros ($2.62 billion) during the initial three months of 2025.

In a released statement, the company explained that the existing unpredictability concerning tariff regulations, strategies to alleviate their impact, and the subsequent potential direct and indirect ramifications—particularly on consumer behavior and demand—makes it too difficult to reliably forecast business performance for the remainder of the year.

Impact of Trade Policies

The extensive and inconsistent tariff policies enacted put additional strain on European car manufacturers, who are already contending with fierce competition from China and elevated operational costs within Europe.

Mercedes anticipates that, should the prevailing trade policies remain in effect, its profit margins in the cars and vans sectors will be negatively affected, as stated in their announcement.