Mercedes-Benz cuts revenue outlook as China slump deepens

Mercedes-Benz Group AG lowered its full-year revenue guidance alongside its second-quarter 2026 results on Monday, citing weaker-than-expected demand in China where a prolonged property downturn continues to erode consumer confidence in premium goods.global.morningstar+1

The move comes one day after Audi Volkswagen AG, which is fully owned by Volkswagen Group, cut its own full-year outlook, now expecting revenue of €58 billion to €63 billion and an operating margin of 5% to 7% — down from the €63 billion to €68 billion and 6% to 8% ranges it had guided at the time of its first-quarter results in May.audi+1

German Luxury Brands Under Siege

The guidance cuts mark the latest in a series of profit warnings from Germany's premium automakers. In June, BMW Bayerische Motoren Werke AG slashed its 2026 automotive operating margin target to between 1% and 3%, down from 4% to 6%, blaming weak Chinese demand and economic disruption from the conflict in the Middle East.cnbc+1

Porsche AG Dr. Ing. h.c. F. Porsche AG reported in early July that first-half deliveries fell 16%, with China volumes plunging nearly a third year over year. CEO Michael Leiters has acknowledged that a return to historically high margins is unlikely in the near term, citing U.S. tariffs and intensifying Chinese competition as the primary obstacles.linkedin+1

China's Domestic EV Makers Fill the Gap

The combined market share of Volkswagen, Audi, BMW, Mercedes-Benz, and Porsche in China's electric vehicle segment fell to just 1.6% in the first quarter of 2026, the lowest on record, with only 19,200 new registrations — a decline of more than 55% from a year earlier. Mercedes-Benz's China sales collapsed 27% in the first three months of the year, while its global deliveries fell roughly 10%.youtube+2

Morningstar analyst Rella Suskin wrote ahead of Monday's results that while North American and European deliveries showed recovery, "this is insufficient to offset the steep decline in Chinese deliveries," adding that it would take "a halting of volume declines in China or double-digit volume growth across the rest of the world" in the second half to achieve flat revenues.global.morningstar

Audi CFO Jürgen Rittersberger said on Sunday that "challenging geopolitical and economic conditions are putting the entire automotive industry, including Audi, under increased pressure to act," adding that the company must "work together with the Volkswagen Group to realign our business model and implement large-scale structural improvements."reuters+1