Back to blog

Mercedes-Benz: New Strategies on the Road to Reviving the European Market

Recent financial results from Mercedes-Benz reveal that the company faced a harsh wake-up call last year, as it struggled with the slowing shift to electric vehicles and weakening demand in China, once an inexhaustible source of profits for German automakers. Its challenges reflect the tough period during which European vehicle manufacturers are grappling with sharp declines in sales, especially in the electric vehicle sector. However, early sales data for this year suggests improvement, which could be the first sign of market recovery.

Mercedes-Benz: New Strategies on the Road to Reviving the European Market

Mercedes Forced to Cut Costs

Mercedes-Benz closed 2024 with a significant drop in sales, with net profit declining by 28.4% year-on-year to €10.4 billion ($10.9 billion), and revenue dropping by 4.5% to €145.6 billion ($152.9 billion). A major challenge for the automaker is the weakening demand for electric vehicles, whose sales plummeted by 23%, while sales also fell by 8.5% in China, once a key market for the German premium segment. Earnings before interest and tax (EBIT) dropped by 30.8% to €13.6 billion ($14.3 billion), with profit margins narrowing mainly due to higher production costs and strong competition from Chinese manufacturers.

Alongside these results, published on February 20, 2025, Mercedes announced cost-cutting measures and a partial return to internal combustion engine vehicle production. According to Reuters, the company aims to reduce costs by 10% in the next two years and double the drop by the end of the decade. During this period, the company plans to launch 19 new combustion engine models and only 17 fully electric vehicles. However, its strategy targeting more demanding customers and the sale of fewer but more expensive models remains unchanged. To reduce risks associated with global trade tensions, the company plans to expand its factories in the U.S. and China to avoid high tariffs. After the release of its financial results and outlook, Mercedes-Benz shares dropped by nearly 4% during Thursday and Friday trading on the Frankfurt Stock Exchange (ETR).*

Graf Mercedes

Source: Investing.com*

These unflattering figures indicate that even the premium car segment is not immune to market turbulence. Chinese competitors such as BYD and other domestic brands show that the global automotive industry is changing – and German giants are still searching for the right response. While Mercedes tries to remain optimistic, its outlook for 2025 is clear: further sales decline, lower margins, and pressure on efficiency. [1] Even though new models could bring a rebound, the question remains whether this will be enough at a time when the market is changing faster than traditional players are accustomed to.

European Market Shows Signs of Improvement

Despite the struggles of electric vehicles in Europe last year, early data for this year suggests improvement. For instance, Germany recorded a more than 50% year-on-year increase in sales of fully electric vehicles in January, according to data from the German Federal Motor Transport Authority (KBA). According to the European Free Trade Association (EFTA), sales of electric vehicles in the EU and the UK increased by 21% year-on-year in January. The European market could be further supported this year by the emission targets, which have come into effect and could encourage manufacturers to accelerate their transition to electric vehicles. Interestingly, although Chinese competition remains a significant issue for European automakers, growth there was not as sharp, standing at only 12%. This could be attributed to the holiday period, as sales tend to slow during the Chinese New Year celebrations.

Tesla Begins Facing Problems in Europe

In contrast to European manufacturers, American Tesla saw a sharp decline in electric vehicle sales in Germany (59%) and France (63%) last month, with a 13% drop across the EU. The reasons for the low interest could also be of a moral nature, as Tesla CEO Elon Musk has become fully engaged in politics, expressing support for far-right European parties, and his daily statements have sparked controversy.

Conclusion

Mercedes-Benz faces a challenge that affects not only the company but the entire European automotive industry. While signs of improvement are emerging in Europe, particularly in electric vehicle sales, the outlook for Mercedes remains uncertain. With declining sales, narrower margins, and increased pressure on efficiency, 2025 is set to be another tough year. The question remains whether new models and expanding production to the U.S. and China will be enough to help the company navigate the changing conditions.

 

* Historical data is not a guarantee of future performance.

[1] Forward-looking statements represent assumptions and current expectations that may not be accurate or are based on current economic conditions that may change. These statements are not guarantees of future performance. Forward-looking statements by their nature involve risk and uncertainty because they relate to future events and circumstances that cannot be predicted and actual developments and results may differ materially from those expressed or implied by any forward-looking statements.

Caution! This marketing material is not and should not be construed as investment advice. Historical data is not a guarantee of future performance. Investing in foreign currencies may affect returns due to fluctuations. All securities transactions may result in both profits and losses. Forward-looking statements represent assumptions and current expectations that may not be accurate or are based on current economic conditions that may change. These statements are not guarantees of future performance. InvestingFox is a trademark of CAPITAL MARKETS, o.c.p., a.s. regulated by the National Bank of Slovakia.

 

 

Sources:
https://group.mercedes-benz.com/dokumente/investoren/berichte/geschaeftsberichte/mercedes-benz/mercedes-benz-factsheet-q4-2024.pdf
https://www.reuters.com/business/autos-transportation/mercedes-benz-earnings-down-by-40-car-division-2024-2025-02-20/
https://fortune.com/europe/2025/02/20/mercedes-cut-costs-profits-dip-plunge-ev-sales/
https://www.euronews.com/business/2025/02/12/global-electric-vehicle-sales-for-january-reveal-us-driven-spurt
https://www.dw.com/en/germany-tesla-sales-plunge-almost-60-in-january/a-71533790
https://www.aol.com/tesla-sales-europe-sliding-thats-123257585.html

 

Read more

Apple and the Foldable iPhone: Could It Set New Sales Records?

Apple and the Foldable iPhone: Could It Set New Sales Records?

The first news about the possibility of starting production of a foldable iPhone bypassed technology enthusiasts at the end of last year, but unfortunately at that time it was only preliminary information, without a broader basis. We are currently in the middle of 2025 and analyst Ming-Chi Kuo of TF International Securities, a renowned expert on the Asian supply chain, commented on the situation. According to him, production of the foldable iPhone is likely to begin as early as 2026. Investors should not miss it, as this novelty would potentially have a chance to push stagnant sales.

Meta and Scale AI: What Will Zuckerberg Gain From the $14 Billion Bet?

Meta and Scale AI: What Will Zuckerberg Gain From the $14 Billion Bet?

At the beginning of last week, the first speculations appeared on the market about one of Meta's largest investments, namely the acquisition of a minority stake in the startup Scale AI founded by Alexander Wang. Preliminary information was subsequently confirmed on Friday, which also led investors to think about the possible impacts. Will Meta be able to reach the very top of AI innovation thanks to the new collaboration, or are the expectations too high? Will we see a new absolute high for Meta's share price soon?

Looking to Diversify Beyond U.S. Equities? M2C Is Going Public!

Looking to Diversify Beyond U.S. Equities? M2C Is Going Public!

When in 1992 a group of students decided to establish a company with the aim of providing services, probably none of them knew that three decades later, the company would stand on the threshold of the Prague Stock Exchange and head to America. Mark2 Corporation, M2C, has moved from a simple Facility Management (FM) to a high-tech ecosystem of services, which today operates in 13 countries in Europe, is expanding to the Middle East and the United States, and is preparing for an initial public offering (IPO) that you will soon be able to use.

The Biggest Drop in Tesla's History, Disputes with Trump, and the Uncertain Future of Electromobility

The Biggest Drop in Tesla's History, Disputes with Trump, and the Uncertain Future of Electromobility

Tesla has always been seen as a representative of technological dominance, vision, and success on the stock market. Unfortunately, since the beginning of 2025, the situation has changed and the market wants to see concrete results that the high valuation, caused by the initial euphoria, would justify. Following this comes a blow to the stock, which fell by 14% in one day, dropping the market capitalization below $1 trillion.* Should investors start worrying?