Mercedes-Benz suffered a slump in sales for its electric vehicles - Wolfram Schroll/Bloomberg
Mercedes-Benz has announced a cost-cutting drive as profits plunged by nearly a third amid a slowdown in its electric car business.
The German car maker said it plans to slash production costs by 10pc by 2027 as it seeks to “ensure the company’s future competitiveness”.
It expects a sharp drop in profits this year despite plans for a series of product launches, and warned of the threat from tariffs by Donald Trump.
Bosses said earnings before interest, taxes and other charges were forecast to be “significantly below” the €13.6bn (£11.3bn) achieved in 2024, which was down 30pc on the previous year.
It came as EV sales plunged by 23pc, while sales in China, the German car giant’s largest single market, dropped by 7pc.
Chief executive Ola Kallenius said: “In an increasingly uncertain world, we are taking steps to make the company leaner, faster and stronger.”
Mercedes’s profits fell by 28pc to €10.4bn (£8.6bn) last year, while revenues also slid about 4pc to €145.6bn (£121.4bn).
Western EV manufacturers have struggled to compete with a flood of cheaper, Chinese-made EVs in Europe and the UK.
This has sparked an escalating stand-off between China and the European Union, which this month voted to increase tariffs on Chinese-made cars to as high as 45pc. China said on Thursday that it is “doing its best” to push for negotiations with the EU over its tariffs on Chinese-made EVs.
It comes as car makers around the world face the risk of US tariffs, after President Trump suggested he will impose tariffs on car imports as high as 25pc.
Mercedes chief financial officer Harald Wilhelm warned that tariffs could knock a percentage point off its profit margins this year, which are already forecast to between 6pc and 8pc in 2025.
Its profit margin fell to 8.1pc in 2024, below the previous year’s 12.6pc.
Mercedes said it aimed to arrest its declining profits with a programme of new vehicle launches, which begins with the CLA.
This would be followed by an upgrade of the S-Class in 2026, an all-electric GLC and C-Class, as well as a string of BEV and electrified high-tech ICE launches at Mercedes-AMG.
The company said that overall, sales are expected to gain traction after dozens of new or refreshed models reach the markets over the next two years.
However, it cut its car and van sales guidance for 2025.
Read the latest updates below.
10:20 AM GMT
Tie-up with China EV maker more natural than Nissan, says Renault boss
Renault’s partnership with Chinese electric car maker Geely may be a more natural one than its long-time alliance with Nissan, its chief executive said.
Luca de Meo said the Chinese manufacturer, which controls car brands including Volvo and Lotus, is an excellent company that works very fast.
He said the partnership is “probably more natural than the different views that Renault and Nissan had historically”.
It comes after Renault revealed a hit to its profits after it sold off shares in Nissan in a scaling back of the two companies’ alliance.
Renault and Geely this week announced plans to jointly produce and sell electric and low-emissions vehicles in Brazil.
Renault Group’s chief executive Luca de Meo hailed its partnership with China EV maker Geely - REUTERS/Gonzalo Fuentes
09:45 AM GMT
German car makers ‘need coordinated strategies like China to stay competitive’
German car makers need coordinated production strategies similar to those seen in China to stay competitive globally, according to analysts.
Michael Field of Morningstar said infrastructure upgrades and supportive policies, particularly toward EVs, could reignite growth in the car industry.
Germany has the highest average labour costs in the automotive industry across Europe, making the sector a key battleground in the upcoming general election.
Mr Field said: “The majority of German parts production plants across developed markets have already been transitioned to producing new energy vehicles, be it hybrid or battery-electric.
“For the German auto industry to prosper we believe policy needs to be collectively supportive of electric car adaption.”
Looking towards the election taking place this weekend, Mr Field added: “Salaries in the auto sector on average are more than double the country’s average.
“We believe this sector’s disproportionate contribution to the wage tax base in Germany makes preserving jobs in the auto sector strategically important from a political point of view.”
09:29 AM GMT
Mercedes shares drop after profit warning
Mercedes-Benz shares sank 3pc in early trading after the German car maker warned profits would be “significantly lower” this year.
The car maker was the worst performer on the Dax stock index in Frankfurt, with fellow vehicle manufacturers Porsche, and Volkswagen also lower.
Mercedes shares have fallen by more than 11pc over the last year.
09:01 AM GMT
China pushes for car tariff talks with EU amid Trump threat
China is seeking talks with the European Union over electric vehicle tariffs after Donald Trump threatened to unleash levies on the global car industry.
Beijing has said it is “doing its best” to push for negotiations with the EU over its tariffs on Chinese-made EVs.
The bloc voted to increase the tariffs to as much as 45.3pc in October after the European Commission launched a competition investigation into whether China companies where benefitting from preferential grants and financing.
Shortly afterwards, China launched its own probes into imports of EU brandy, dairy and pork products.
However, it appears Beijing wants to return to hold talks days after the US president suggested he will impose tariffs on car imports as high as 25pc.
China commerce ministry spokesman He Yadong said: “China has been doing its best to push for negotiations with the EU.
“It is hoped that the EU will take notice of the call from industry and promote bilateral investment cooperation through dialogue and consultation.”
Workers assemble a Chinese electric truck made by startup Windrose - STR/AFP via Getty Images
08:47 AM GMT
Car finance scandal ‘biggest question’ for investors, says Lloyds boss
The boss of Lloyds Bank said the motor finance mis-selling scandal is the “biggest question” hanging over investors.
Charlie Nunn said there was no read-across from its car finance worries to other loans.
Lloyds set aside an additional £700m provision in the final three months of last year, adding to the £450m already confirmed last year in light of a court judgment on the issue in October.
That found it was unlawful for car dealers to receive commission on motor finance from lenders without a customer’s informed consent.
The decision opened the door for a potential fresh wave of complaints from consumers who think they may have been mis-sold car finance in previous years.
The banking group is exposed to the market through its brand Black Horse, which is one of the biggest car finance providers in the UK.
Mr Nunn said: “Clearly, significant uncertainty remains around the final financial impact.”
Lloyds Banking Group chief executive Charlie Nunn said ‘significant uncertainty’ remains about the car finance mis-selling allegations - Hollie Adams/Bloomberg
08:19 AM GMT
UK markets mixed at the open
On a busy morning for corporate updates, UK stock markets were mixed at the start of trading.
The FTSE 100 was down 0.4pc to 8,681.91 while the midcap FTSE 250 rose 0.1pc to 20,732.98.
08:17 AM GMT
Tesla rival once valued at $30bn collapses amid electric car downturn
The drop in Mercedes-Benz sales comes after an electric truck-maker that sought to rival Elon Musk’s Tesla has filed for bankruptcy in the US after its founder was sent to prison for fraud.
Nikola, which developed hydrogen fuel and battery-powered trucks, was once valued at more than $30bn (£24bn), but its share price collapsed just months after it went public in 2020 amid claims it was misleading investors.
Milton quit the business in 2021 and in December 2023 was sentenced to four years in prison and fined $1m for defrauding investors. In 2021, the company agreed to settle claims with US regulators for $125m without admitting wrongdoing.
Nikola has filed for bankruptcy
08:04 AM GMT
Mercedes warns profits at risk from tariff blow
Mercedes said its prediction of a sharp fall in profits does not take into account the potential impact of tariffs from Donald Trump’s US administration.
Its car maker’s profit margin fell to 8.1pc last year, below the previous year’s 12.6pc. The company expects that margin to be between 6pc and 8pc in 2025.
However, its chief financial officer Harald Wilhelm told analysts that tariffs could knock a whole percentage point off its margin estimates for this year.
Mr Trump has already imposed 25pc tariffs on goods from neighbours Canada and Mexico, along with extra tariffs of 10 per cent on China, and has warned that Europe could be next.
07:48 AM GMT
Mercedes warns of sharp drop in profits this year
Mercedes-Benz said it expects a sharp drop in profits this year despite plans for a series of product launches.
The company warned that its earnings before interest, taxes and other charges would be “significantly below” the €13.6bn ebitda achieved in 2024, which was down 30pc on the previous year.
This is despite a programme of new launches begins with the CLA, followed by an upgrade of the S-Class in 2026, an all-electric GLC and C-Class, as well as a string of BEV and electrified high-tech ICE launches at Mercedes-AMG.
It said that overall, sales are expected to gain traction after dozens of new or refreshed models reach the markets over the next two years.
However, it cut its car and van sales guidance for 2025.
07:36 AM GMT
Lloyds Bank’s pot for possible motor finance scandal claims tops £1bn
Lloyds Bank’s bill for the motor finance scandal topped £1bn after it set aside millions more to pay for possible customer compensation payouts.
The FTSE 100 bank put aside another £700m because of a Supreme Court case on the sale of car loans -- adding to a £450m hit taken last year.
It means the bill for Lloyds, which lends through its Black Horse arm, now stands at £1.2bn, and the bank said “significant uncertainty” remains over whether it will go higher.
Lloyds said the new £700m charge was linked to a Court of Appeal judgment which has expanded the scope of possible compensation for customers to include all motor commission payouts.
The Supreme Court is set to hold a hearing into the case in early April.
Lloyds’s original provision was linked to an ongoing review by the City watchdog over bonus payments made to car dealers.
The Financial Conduct Authority has been investigating these, known as discretionary commission arrangements, for the past 12 months.
Lenders suffered a setback earlier this week when the Supreme Court rejected an attempt by the Treasury to intervene in the case on behalf of the banks.
The Treasury has said the matter could hurt the UK economy because so many cars are purchased using car finance.
Lloyds Bank has set aside another £700m for potential claims over alleged motor finance misselling - NEIL HALL/EPA-EFE/Shutterstock
07:30 AM GMT
Renault profits surge as it scales back Nissan partnership
While Mercedes has struggled, rival car maker Renault said it defied headwinds in the industry by boosting revenue and attaining record profitability.
The French car maker, which also includes the budget Dacia brand and sportscar Alpine, saw revenues rising by 7.4pc to hit €56.2bn (£46.5bn), with its operating profit margin coming in at a record 7.6pc.
However profits sank to €800m (£662m) after it booked a €1.5bn loss on the sale of Nissan shares, as it scaled back its partnership with the Japanese brand.
Without the sale of Nissan shares, profit would have come in at €2.8bn, a 21pc increase on 2023.
Chief financial officer Thierry Pieton said: “This excellent performance is the result of our product offensive and cost cutting.
“Renault Group has never been so strong and benefited from such solid fundamentals.”
Renault’s profitability hit a new record in 2024 - Jeremy Suyker/Bloomberg
07:28 AM GMT
Mercedes to cut costs amid slowdown in electric car sales
Mercedes-Benz announced a cost-cutting drive as profits plunged by nearly a third amid a slowdown in its electric car business.
EV sales plunged by 23pc while sales in China, the German car giant’s largest single market, dropped by 7pc in 2024.
The company’s profits fell by 28pc to €10.4bn (£8.6bn) last year, while revenues also slid about 4pc to €145.6bn (£121.4bn).
The group said it planned to slash production costs by 10pc by 2027 as it seeks to “ensure the company’s future competitiveness”.
Chief executive Ola Kallenius said: “In an increasingly uncertain world, we are taking steps to make the company leaner, faster and stronger.”
07:21 AM GMT
Good morning
Thanks for joining me. On a busy morning of corporate updates, we begin with Mercedes-Benz, which has announced plans to cut production costs amid a sharp slowdown in electric vehicle sales.
The German car giant plans to reduce costs by 10pc by 2027 after EV sales plunged by 23pc last year, while deals in China dropped by 7pc.
Asian shares traded mostly lower after a quiet day on Wall Street, where the S&P 500 added to its record.
Worries about US President Donald Trump’s tariff policies remain high on regional investors’ minds.
Japan’s benchmark Nikkei 225 dropped 1.2pc to finish at 38,678.04. Australia’s S&P/ASX 200 declined 1.2pc to 8,322.80, while South Korea’s Kospi lost nearly 0.7pc to 2,654.06.
Hong Kong’s Hang Seng dipped 1.3pc to 22,640.18, after China left its benchmark interest rate unchanged, in a move it said was meant to maintain financial stability. The Shanghai Composite shed less than 0.1pc to 3,349.60.
On Wall Street, the benchmark S&P 500 rose 0.2pc to 6,144.15. The Dow Jones Industrial Average rose 0.2pc to 44,627.59 and the Nasdaq Composite rose 0.1pc to 20,056.25.
In the bond market, the yield on key 10-year US Treasury notes fell to 4.538pc from 4.551pc late on Tuesday.
