Mercedes-Benz Q2 2026: Profit Beats Expectations as China Sales Plunge 30%

Reported EBIT of €1.5 billion was slightly below the consensus estimate of €1.6 billion, but the adjusted figure and the confirmation of full-year margin guidance reassured investors .

Divisional Performance: Cars Struggle, Vans and Financial Services Shine

• Mercedes-Benz Cars: The core division faced the strongest headwinds. Adjusted EBIT fell to €1.2 billion from €1.7 billion a year earlier, with the adjusted return on sales dropping to 5.3% from 7.2% . Global car deliveries declined 8% to 417,800 units . The division's adjusted return on sales of 4.0% still landed within the 3–5% full-year guidance range .
• Mercedes-Benz Vans: A clear bright spot. The vans segment delivered stable volumes of roughly 94,000 units, generated €4.5 billion in revenue, and posted adjusted EBIT of €454 million with a robust 10.1% adjusted return on sales .
• Mercedes-Benz Financial Services: Strong earnings from the financing unit helped offset weakness in the car division, contributing materially to the reported EBIT beat .
• BEV Sales: Battery electric vehicle sales surged 51% year-over-year, driven by an 87% increase in Europe as the company ramped up its EV lineup . Mercedes also raised its 2026 forecast for the share of electrified vehicles to between 23% and 25% .

The China Problem: Sales Plunge 30%, Full-Year Outlook Cut

The single biggest story in the quarter is China. Mercedes-Benz's passenger car sales in the country plunged 30% in Q2 2026 compared with the same period in 2025, to roughly 98,600 units . The company attributed the decline to "an intensifying competitive environment" — local Chinese EV makers are aggressively taking share in the luxury segment that was once a reliable profit engine for the Stuttgart-based automaker .

The fallout was immediate. Mercedes cut its full-year 2026 outlook for both car sales and group revenue from "stagnation" to "slightly below prior-year levels" . The company explicitly blamed "in particular, the negative development of the Chinese market" for the downgrade . According to the definitions in its 2025 annual report, a "slightly below" forecast could translate into a decline of between 2% and 7.5% in full-year car sales .

Management also took a €704 million write-down on its Chinese equity investments, though the company stressed that this was an accounting charge that did not affect adjusted operating profit or cash flow . Excluding China, Mercedes-Benz car sales actually increased 2% in the first half of 2026 .

Despite the sales cut, Mercedes confirmed its full-year guidance for the car division's adjusted return on sales of 3–5% and its group margin targets, signaling confidence that cost-cutting can protect profitability even on lower volume .

€1 Billion Share Buyback and Capital Returns

Against this mixed backdrop, Mercedes-Benz announced a continuation of its share buyback program. After completing the prior €2.0 billion buyback on June 1, 2026, the company said it will repurchase up to €1.0 billion in additional shares until the 2027 Annual General Meeting . This was part of a broader capital allocation update that also included €0.4 billion in proceeds from the first Daimler Truck share sell-down .

Market Reaction: Shares Jump on Profit Beat and Buyback

Despite the sales guidance cut, Mercedes-Benz shares rose more than 4% and as much as 5% in Frankfurt trading on July 28 . Investors were reportedly "reassured that the damage from China was not worse than feared" and focused on the earnings beat, the confirmed margin guidance, and the company's commitment to returning capital through buybacks .

Analyst Ratings and Price Targets: Cautious Optimism

Analyst sentiment was mixed heading into the Q2 report, with many firms trimming targets in the face of China headwinds. By the day of the earnings release, the consensus reflected caution but also pockets of optimism.

Analysts at Oddo BHF said the results were broadly above expectations, though some caution remained about the downward revision to the sales outlook . The broader trend leading into earnings was cautious, but the Q2 beat and guidance confirmation provided a floor for the stock.