Mercedes-Benz has warned that its profits will be “significantly” lower in 2025 and announced a new cost-cutting strategy as it braces for potential U.S. import tariffs under President Donald Trump.
The German automaker expects its profit margins to fall between 6% and 8% this year, down from 8.1% in 2024 and 12.6% in the previous year, excluding the impact of any new U.S. trade measures.
“The outlook is based on the current regulatory framework, any additional tariffs over and above are not included in this guidance,” said chief financial officer Harald Wilhelm. He noted that if U.S. tariffs on European car imports rise from 2.5% to 10%, the company’s car margins could take a hit of up to one percentage point before mitigation efforts.
Trump has also floated the possibility of raising tariffs on imported cars to 25%, a move that could have major implications for Mercedes-Benz, which imported more than half of the 374,000 vehicles it sold in the U.S. last year.
The company’s car division saw profits drop 41% in 2024, with net profits falling 28% to €10.4 billion, while revenue declined 5% to €146 billion.
The luxury automaker has struggled with sluggish demand in Europe and a price war in China, where high-end vehicles have seen weaker sales. This has particularly affected Mercedes-Benz, which in recent years shifted focus to selling premium and high-margin models like its Maybach limousine.
In response to mounting challenges, CEO Ola Källenius on Thursday announced plans to reduce production costs by 10% by 2027 following discussions with the IG Metall union over job cuts in Germany. The company also aims to launch a dozen new models, beginning with its new electric CLA, in an effort to revive sales and improve profitability.
Mercedes-Benz’s share price, already down more than 11% over the past year, fell another 3% on Thursday after the announcement.
