STUTTGART / LONDON (IT BOLTWISE) – Despite a significant drop in profits in the third quarter, Mercedes-Benz is showing robustness. The carmaker is struggling with higher tariffs and weakening business in China, but was able to slightly improve its operating margin. The resumption of share buybacks signals confidence in the future.
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Mercedes-Benz suffered a significant drop in profits in the third quarter, due to an ongoing austerity program and external factors such as higher tariffs and foreign exchange effects. Despite these challenges, the carmaker was able to slightly improve its operating margin in the important passenger car division, which pleasantly surprised analysts. The company’s shares responded with a significant price increase, reflecting investors’ confidence in Mercedes-Benz’s long-term strategy.
The austerity program, which includes job cuts, led to special costs amounting to 1.35 billion euros. Of this, 876 million euros are attributable to a voluntary workforce reduction program in Germany. These measures are intended to reduce production and fixed costs by ten percent by 2027. Despite the high costs, management is optimistic that these savings will strengthen the company’s competitiveness in the long term.
Another stressful factor is the ongoing customs dispute, which is making export conditions more difficult for Mercedes-Benz. The markets in the USA and China are particularly affected, where higher import tariffs and intense price wars are depressing sales figures. Nevertheless, the group plans to resume its share buybacks, which is seen as a sign of confidence in the company’s financial stability. Shares worth up to two billion euros are to be bought back over twelve months.
The challenges in the Chinese market, once a growth engine for Mercedes-Benz, are particularly serious. The real estate crisis in the country has dampened the purchasing mood of wealthy customers, and the price war is further exacerbating the situation. To meet these challenges, Mercedes-Benz is relying on a comprehensive product and technology offensive. More than 40 new vehicles are to be presented by 2027, including the fully electric GLC, which is considered a beacon of hope.
Overall, Mercedes-Benz is proving to be robust despite the adverse circumstances. The quarterly results are in line with the full-year forecasts, and the introduction of new models such as the all-electric GLC and the CLA in the entry-level segment underlines the company’s innovative strength. Analysts praise the solid performance in the global economic environment and see the share buybacks as a positive signal for the future.
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