Mercedes-Benz Group reported third-quarter revenue of EUR 30.7 billion, down 4.4 per cent year on year, alongside a sharp rise in earnings that owes almost everything to a weak comparative base.
EBIT for the quarter was EUR 1.77 billion, up 136 per cent. Net profit was EUR 1.52 billion, up 27.7 per cent.
The base effect, stated plainly
The EBIT jump is driven by last year’s low base. In the same quarter a year earlier Mercedes booked EUR 750 million in EBIT after large one-off charges tied to job cuts and legal disputes.
Strip those out and the picture reverses. Adjusted EBIT fell 15 per cent to EUR 1.78 billion.
The car division is the problem
Adjusted EBIT in the passenger car division fell from EUR 1.14 billion a year earlier to EUR 560 million. Divisional cash flow also swung from positive to negative.
Global passenger car deliveries were 407,200 units, down 8 per cent. Mercedes attributes the decline to a severe market environment in China and intensifying competition there.
The guidance cut came first
One day before publishing these numbers, Mercedes lowered its 2026 guidance for the passenger car division’s adjusted return on sales from a range of 3 to 5 per cent to a range of 2 to 3 per cent.
The company gave three reasons: pressure in the Chinese market, higher raw material costs in the fourth quarter, and increased product cycle expenses.
It also cut its 2026 group operating profit outlook, now expecting profit to be broadly flat year on year rather than substantially higher.
What this means for the European supply chain
Mercedes is the clearest case so far of a German premium OEM translating Chinese volume loss directly into a European margin cut. The sequence matters. The guidance moved before the quarterly print, which means management had already seen enough of the fourth-quarter cost base and the China order book to stop promising growth.
For suppliers in Germany and Central Europe, the transmission channel is volume, not price. An 8 per cent decline in deliveries at the top of the chain arrives at tier one and tier two as a schedule cut with a lag of one to two quarters, and at a fixed cost base that was built for a larger car market.
The Chinese premium segment is where the money left. Mercedes, BMW and Audi are now defending a price band that domestic brands have entered with products that are cheaper, faster to update, and sold through a distribution model the German three cannot copy without dismantling their dealer networks.
Editor’s note: This is an adapted translation of the original Gasgoo report. It has been trimmed and restructured for readability for an international business audience. The full original (in Chinese) is at https://auto.gasgoo.com/news/202610/28I70476171C109.shtml.