Chinese cars are becoming more popular, Trump's tariffs are hitting the auto industry hard, and consumers want cheaper cars. That's why Mercedes-Benz and Audi are recording a record collapse in profits.
Mercedes-Benz's profit collapsed by more than two-thirds from April to June to 957 million euros, the German automaker announced. This is about 69% less than last year.
In the first half of the year, the decline was 55.8% compared to 2024. While the concern earned 6.1 billion euros in the first six months of last year, its profit is now only 2.7 billion.
Tariffs, sales collapse and layoffs
The Stuttgart-based company cited US tariffs, lower sales, restructuring costs and other reasons for this. However, given the "dynamic business environment", this is a solid financial result, said the company's CEO Ola Källenius.
Since April, car imports into the US - for example, the luxury S-Class from Mercedes-Benz - have been subject to a 27.5 percent tariff, up from 2.5 percent before. According to analysts, the company has not passed on the increase in prices to customers, which has also led to a decrease in profits. The profitability of the main business segment - passenger cars - has halved to 5.1 percent.
Competition from China has a serious impact
In addition to tariffs, the German automaker has also suffered from lower sales and costs to achieve higher efficiency, Mercedes-Benz explains.
From April to June, the brand sold nearly 454,000 cars, which is 9% less. The decline was strongest in the key Chinese market - by 19%. There is a fierce fight in the electric car segment, where the Germans are still lagging behind in more affordable models. Luxury goods of all kinds are hardly finding buyers due to economic stagnation, ARD writes. In addition, Chinese electric cars are becoming increasingly popular in Europe.
Despite the tariff agreement reached between Washington and Brussels, sales and turnover in 2025 are expected to remain significantly lower than in the previous year. In the first half of the year, turnover fell by 8.6 percent from 72.6 billion euros to around 66.4 billion euros.
In 2024, the company's turnover also shrank by 4.5 percent year-on-year. That is why the management of "Mercedes-Benz" has decided to start a large-scale restructuring to save money. By 2027, five billion euros are expected to be saved annually, including by cutting thousands of jobs.
Audi also suffers a profit collapse
Audi is also restructuring its production to cut costs and jobs. This is one of the reasons, along with tariffs and competition in China, that the company also announced a decline in the first half of the year. And for the third time in a row.
The profit of the automaker, which is part of the Volkswagen Group, in the first six months of 2025 was 1.3 billion euros. This is a decrease of 37.5 percent.