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Introduction & Market Context
Mercedes-Benz Group AG (ETR:MBG) presented its Q2 2025 financial results on July 30, 2025, revealing a challenging quarter marked by significant profit declines amid tariff pressures, though with some bright spots in electric vehicle adoption and cash flow generation.
The luxury automaker reported a substantial 68% year-over-year decline in adjusted earnings before interest and taxes (EBIT), falling to €1.3 billion from €4.0 billion in the same period last year. Despite this steep drop in profitability, the company managed to increase its free cash flow by 14% to €1.9 billion.
The presentation comes amid a complex global automotive landscape, with the company specifically citing tariff impacts as a major factor affecting performance. Mercedes-Benz stock closed at €56.39 on October 31, 2025, down 0.44% for the day, and currently trading within its 52-week range of €45.99 to €63.71.
Quarterly Performance Highlights
Mercedes-Benz reported a 10% decrease in revenue to €33.2 billion for Q2 2025, down from €36.7 billion in Q2 2024. This decline was accompanied by a sharp 68% drop in earnings per share to €0.95, reflecting significant profitability challenges.
As shown in the following comprehensive financial overview:
The company’s car division saw sales volume decrease by 9% to 454,000 units, while the van division experienced a 10% decline to 93,000 units. The average selling price for Mercedes-Benz cars also fell by 5% to €67,700, suggesting pricing pressures in key markets.
Despite these challenges, the company maintained a solid net industrial liquidity position of €30.8 billion, representing only a modest 2% decrease from the €31.4 billion reported at the end of 2024.
Electric Vehicle Transition
A bright spot in the quarterly results was the continued progress in Mercedes-Benz’s electric vehicle strategy. EV sales increased to 94,000 units, up from 90,000 in Q2 2024, with electric vehicles now representing 21% of total volume, compared to 18% a year earlier.
The following chart illustrates this transition across vehicle segments:
The electric transition is even more pronounced in the van segment, where EV sales surged by 32% to 7,000 units, now comprising 7% of total van sales compared to 5% in the previous year.
This growth in electric vehicle adoption aligns with the company’s strategic focus on electrification, though the overall decline in total vehicle sales indicates broader market challenges.
Divisional Performance Analysis
The Mercedes-Benz Cars division, which represents the core of the company’s business, experienced significant pressure on profitability. Adjusted EBIT for the cars division fell by 56% to €1.2 billion, with the return on sales declining substantially.
The following chart details the financial performance of the cars division:
The vans division similarly faced profitability challenges, with adjusted EBIT decreasing by 47% to €441 million. In contrast, the mobility division showed resilience with a 7% increase in adjusted EBIT to €290 million.
The company’s presentation included detailed waterfall charts breaking down the factors affecting EBIT performance, with volume, pricing, and tariff impacts cited as key negative factors, partially offset by improvements in industrial performance.
Strategic Initiatives
Despite the challenging quarter, Mercedes-Benz highlighted several strategic initiatives aimed at strengthening its market position. These included the premiere of the CLA Shooting Brake and the start of production and deliveries of the CLA in July.
The company also emphasized successful long-distance testing of its VLE platform and showcased the AMG GT XX as representing the future of performance with advanced driving assistance capabilities demonstrated in China.
On the retail front, Mercedes-Benz noted the start of own retail sales in Germany and the opening of the first Maybach brand center in Seoul, reinforcing its luxury positioning in key markets.
Forward-Looking Statements
Looking ahead, Mercedes-Benz maintained its guidance for 2025, providing a comprehensive overview of divisional targets:
For the group as a whole, the company outlined its expectations for revenue, EBIT, and free cash flow:
These projections reflect Mercedes-Benz’s confidence in its ability to navigate current challenges while continuing to execute its strategic priorities around electrification, digitalization, and luxury positioning.
Conclusion
Mercedes-Benz’s Q2 2025 results reveal a company facing significant headwinds, particularly from tariffs and market pressures, resulting in substantial profit declines. However, the company’s ability to maintain positive cash flow generation and continue its electric vehicle transition suggests underlying resilience.
The maintained guidance for 2025 indicates management’s confidence in addressing current challenges, though investors will likely watch closely for signs of improvement in the coming quarters. The company’s strategic focus on electrification, luxury positioning, and technological innovation remains intact, even as it navigates a difficult global automotive landscape.
Full presentation:
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