China Wiped Out 94% of Mercedes-Benz Car Division Profit

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Net profit rose 13.5 percent even as the core car business faltered.

Car division earnings collapsed 94 percent on Chinese writedowns.

China sales fell 30 percent while Europe and the US both grew.

Mercedes-Benz has revealed that its net profit rose 13.5 percent from €957 million ($1.09 billion) to €1.09 billion ($1.24 billion) in the second quarter of 2026. While this may sound like good news, the company took an absolute beating in China and is missing out on this hugely important market, which had long served as its growth engine.

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The brand’s Cars division posted an adjusted EBIT of €909 million ($1.03 billion) in the quarter, just as the firm embarks on its largest-ever model launch program. Although it’s rolled out several new models in China, including the CLA, it appears Mercedes has been unable to convince locals not to buy from newer Chinese brands.

Read: Audi, BMW, And Mercedes Are Building Cars In China Nobody Wants To Buy

The Cars division’s reported EBIT collapsed roughly 94 percent year-on-year, from €783 million ($892 million) to just €49 million ($55.8 million). That plunge was driven by China, as the figure includes impairments of €704 million ($803 million) “in connection with Chinese equity-method investments.” Despite this, Mercedes says “the Chinese market and customers in China remain of high strategic importance to Mercedes-Benz.”

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Chinese Sales Collapse

While Mercedes-Benz has held up in many key markets, China dragged down its overall results. In the second quarter, Mercedes-Benz Cars sold 417,765 vehicles, down sharply from the 453,674 shifted a year earlier. China is largely to blame, with local sales collapsing by 30 percent.

By comparison, European sales climbed 4 percent and the United States rose 10 percent. Strip China out entirely and Mercedes-Benz’s global car sales actually grew 2 percent year-on-year.

The key driver behind Mercedes-Benz’s profits wasn’t its Cars division, nor Vans. It was Mercedes-Benz Financial Services, which posted a 70 percent jump in adjusted EBIT to €492 million ($560 million), thanks to higher portfolio margins and lower operating expenses. Total contract volume, meanwhile, grew 2.2 percent on the back of US expansion and favorable exchange rates. Also helping the broader Mercedes group were proceeds of €417 million ($475 million) from the partial sale of its stake in Daimler Truck.

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