Increases in tariffs, the costs of an efficiency programme involving job cuts, and weak business in China, are causing Mercedes-Benz serious problems. Earnings before interest and taxes (Ebit) and net profit both fell by almost 69% in the second quarter of this year. The bottom line is 957 million euros (previous year: 3,062 million euros). Following a decline of just over 40% in the first quarter, the car manufacturer's earnings for the first half of the year are less than half of what they were in the same period in 2024.

Nevertheless, CEO Ola Källenius spoke of solid financial results in a dynamic business environment in last week's conference calls with analysts and journalists. Competition in China is extremely intense, he said. In addition, special items and high tariffs had an impact on the results. CFO Harald Wilhelm put these negative effects at 715 million euros. The majority of this was accounted for by provisions of 560 million euros for an efficiency programme. Wilhelm did not specify the number of employees who have so far agreed to leave the company in exchange for a severance payment. He added that it was not just a matter of cutting jobs outside of production, but also of increasing efficiency in areas such as purchasing and development.

At the end of April, the Executive Board announced its annual profitability outlook with and without the impact of US import tariffs set at 27.5%. Following the agreement between the US and the EU set at 15%, management now expects a return on sales before interest and taxes of 4% to 6% for the Cars segment (passenger cars and vans for private customers), adjusted for special items. Last year, it was 8.1%. The newly negotiated tariffs, together with duties on imports from other countries, reduced the margin by 150 basis points (1.5 percentage points) for the year as a whole, Wilhelm reported. Previously, he had cited an expected impact of 300 basis points. In the second quarter, the tariffs reduced earnings by a mid-three-digit million amount. Without this effect, the segment margin would have been 6.6%. Including the effects of the tariffs, it was 5.1%.

Källenius emphasised that Mercedes-Benz had been involved in talks with the US about the tariffs for months, and had presented its ideas.

The fact that EU tariffs on cars from the US are to be reduced from 10% to zero is a positive development for Mercedes-Benz. „We are one of the leading exporters from the US to Europe and the rest of the world,“ said Källenius. Two-thirds of the large SUVs produced by the company at its plant in Tuscaloosa, Alabama, are exported abroad. „But we import more into the US than we export.“

Källenius defended the EU Commission against criticism of the agreement with the United States. It had not been easy, he said, adding that he had great respect for „what the EU had to work through.“ The fact that the EU is reducing its import tariffs to zero is not a gift to the Americans. „It's well thought out and will actually help us,“ he said. Due to the large flow of deliveries across the Atlantic, this solution secures jobs in Europe.

Källenius and Wilhelm did not quantify the positive effect for Mercedes-Benz resulting from imports from the US to the EU, though the CFO commented that it was fairly marginal.

Mercedes-Benz's consolidated revenue fell by just under 10% to 33.2 billion euros in the second quarter. This roughly corresponded to the 9% decline in sales. The increase in cash flow came as a surprise: free cash flow in the industrial business (excluding financial services) rose by 14.5% to 1.87 billion euros. „This underscores our resilience,“ commented Källenius.

Mercedes-Benz drifted downwards last week after the earnings report.