Crisis in China causes Mercedes’ car division to plummet 94%

Mercedes-Benz closed the second quarter of 2026 with a net profit 13.5% higher, at 1.09 billion euros, but saw the profit of the car division practically disappear because of China. Faced with the drop in sales in the country, the German automaker cut its revenue and sales projections for the year.

The operating result of the car division fell by around 94%, from 783 million to 49 million euros. The explanation lies in 704 million euros of recognized losses on stakes that the brand has in Chinese companies — an adjustment in the value of the balance sheet, which did not take money from the cash. Discounting this effect, the division’s profit fell 26% to 909 million euros, and the margin went from 5.1% to 4% of sales, within the company’s target.

The loss of space, however, is real. There were 417,765 cars sold in the quarter, against 453,674 a year earlier. In China, registrations fell 30%, pressured by competition from local brands and weak demand. In Europe, sales rose 4%; in the United States, 10%. Without China, global volume would have grown by 2%.

Therefore, the company started to project revenue and car sales slightly below those of 2025. It maintained the profitability target for the year and raised the expected share of electrified vehicles to 23% to 25%. Shares rose more than 5% in Frankfurt.

Two fronts helped to hold the balance sheet: the financial services arm, with a 70% increase in adjusted operating profit, to 492 million euros, and the 417 million obtained from the sale of part of the stake in Daimler Truck. In the portfolio, the relief came from electric vehicles, with 52,852 units sold, 51% more than a year earlier.

The balance sheet does not disclose data from Brazil, where the brand has been selling only imported passenger cars since it ended production in Iracemápolis (SP) and sold the factory to China’s GWM.