Mercedes-Benz Q1 profit drops 43% on lower sales, warns on US tariffs

Mercedes-Benz saw a sharp drop in earnings at the start of 2025, weighed down by sluggish business in the key Chinese market.

The German luxury carmaker reported on Wednesday a 43% year-on-year decline in first-quarter net profit to €1.73 billion ($1.96 billion).

Revenue fell 7.3% to €33.2 billion due to a global decline in vehicle sales. Operating profit dropped nearly 41% to €2.29 billion, reflecting ongoing market challenges.

In its core passenger car segment, the adjusted operating margin — closely watched by investors — slipped by 1.7 percentage points to 7.3%. While down, the result was better than many analysts had anticipated.

Mercedes-Benz also warned of a potentially significant impact on profitability from recently imposed US import tariffs. However, the Stuttgart-based company said it remains difficult to assess the precise effect on demand due to the evolving situation and possible retaliatory measures.

The company's prior full-year outlook remains unchanged. But if the current trade policy stance persists, Mercedes-Benz acknowledged that it expects negative effects on earnings, free cash flow and divisional margins.

The automaker had previously cautioned that a 10% US import duty could shave 1 percentage point off the passenger car division's operating margin. At the beginning of April, US President Donald Trump raised tariffs on EU car imports to 25%.