No improvement compared to the previous year: Mercedes-Benz surprisingly trims its profit forecast

This year, the result at Mercedes-Benz should be significantly better than in 2025. But nothing will come of it, as the car manufacturer reports. Investors on the stock market reacted disappointedly to the news.

The car manufacturer Mercedes-Benz is trimming its profit plans for the current year. In addition to an increasingly difficult environment in China, the group also expects higher costs in the fourth quarter, including for materials, as the DAX company surprisingly announced in Stuttgart. In an initial reaction, the share lost around four percent.

In the passenger car business, the much-noticed profit margin adjusted for special effects is now only expected to reach 2 to 3 percent in 2026 instead of the previously targeted 3 to 5 percent. The profit margin refers to the company's profit share of sales. The group's earnings before interest and taxes are therefore only likely to be at the previous year's level instead of significantly higher. It should actually increase significantly because Mercedes had high costs for job cuts last year, which will no longer apply this year.

The prospects for 2026 have also clouded over the free inflow of funds. It is particularly important to Mercedes investors because the company wants to regularly invest any remaining funds after regular dividend payments in share buybacks. This free cash flow from the industrial business - i.e. excluding financial services - will now probably remain "significantly" below the previous year's value instead of just "slightly" below it.

Low operating profit margin

The group also published figures for the third quarter ahead of schedule. According to preliminary figures, Mercedes only received 172 million euros in free financial resources from the vehicle business. That is less than financial market experts had calculated at 422 million euros.

Before interest and taxes, Mercedes achieved earnings (EBIT) of 1.77 billion euros, more than twice as much as the year before with 750 million euros. However, the Swabians had recorded high special charges, especially for job cuts and legal disputes.

Adjusted for special items, the operating profit margin in the passenger car business reached 2.5 percent, almost half as much as the previous year at 4.8 percent. Things continued to go better in the van business - there, out of every 100 euros in sales in daily business, around 9.40 euros remained in operating profit. The group wants to present detailed figures - including net profit - on Wednesday.