Mercedes-Benz shares surge after Q2 profit beats estimates

Mercedes-Benz reported a 22% rise in second-quarter operating profit on Tuesday but lowered its full-year car sales forecast, warning that continued weakness in China would weigh on volume for the rest of 2026.

Better-Than-Expected Earnings

The German luxury carmaker posted group EBIT of €1.55 billion for the quarter ended June 30, up from €1.27 billion a year earlier, while group adjusted EBIT reached €2.3 billion — well ahead of both the Jefferies estimate of €1.47 billion and the broader analyst consensus of €1.65 billion. Revenue fell 3.3% year-on-year to €32.1 billion but still topped forecasts by around 1.5%. The Cars division delivered an adjusted return on sales of 4%, landing in the middle of its guided range of 3%–5%, while the Vans unit outperformed at 10.2%.group.mercedes-benz+2

Mercedes confirmed its full-year Cars adjusted return-on-sales guidance of 3%–5% and Vans at 8%–10%, but nudged its revenue outlook to "slightly below" the prior year, versus a previous forecast of flat. It now expects car sales to come in slightly below 2025 levels — a shift from prior guidance of stagnation — which Reuters reported could translate into a decline of between 2% and 7.5%.euronews+2

China Drag and New Buyback

The downgrade reflects the toll of fierce competition in China, where Mercedes saw sales plunge 30% in the second quarter. Chinese rivals have intensified their push into the premium segment, pressuring both volume and pricing for European brands. Mercedes said it was prioritizing pricing discipline over market share in the region.globalbankingandfinance+1

Alongside the results, Mercedes announced a new €1 billion share buyback program, which UBS analysts welcomed. The company had completed a previous €2 billion buyback in June.group.mercedes-benz+1

Market Reaction and Analyst Views

Shares rose as much as 5.9% in Frankfurt on Tuesday morning, with the results also lifting peers BMW Bayerische Motoren Werke AG and Volkswagen. Jefferies maintained its buy rating with a €52 target, saying results beat expectations across all metrics, while UBS held a neutral rating at €50. Oddo BHF was less optimistic, maintaining an underperform rating with a €35 target, citing concern over the downward revision to sales guidance.marketscreener+2

The results mark a stabilization point for CEO Ola Källenius, who has faced mounting investor pressure to prove that his luxury-focused strategy can deliver amid an industry-wide downturn in China and broader macroeconomic uncertainty.