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Questioning Mercedes' Strategy as Profit Slump Highlights Structural Weakness

Published July 28, 2026 at 7:03 AM UTC

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The sharp profit drop in Mercedes-Benz's auto division and the subsequent sales forecast cut raise serious questions about the company's direction. While the group's overall profit got a lift from financial services, that cannot hide the fact that its core business is losing ground. Competitors like BMW and Audi are facing similar issues, but Mercedes seems particularly exposed to the slowdown in China, where local EV makers are grabbing market share. The forecast cut may have been necessary, but it also signals that the company's high-price, high-cost model is under strain. Mercedes has been slow to launch competitive electric models in the mass luxury segment, and its efforts to reduce production costs have not yet yielded results. Workers worry about job security, and dealers fear shrinking inventories. If Mercedes does not accelerate its restructuring and EV push, the profit slump could become a long-term trend. The warning may be the first of several.