Mercedes just posted one of its toughest years in recent memory. Full-year earnings before interest and taxes dropped 57% in 2025. The damage came largely from about $1.2 billion in tariff costs, heavy price pressure in China, and currency headwinds. Revenue fell 9.2% to €132.2 billion. Net profit dropped 48.8% to €5.3 billion. Earnings per share slid to €5.34 from €10.19. Free cash flow from the industrial business came in at €5.4 billion, down from €9.2 billion a year earlier. Even with that hit, Mercedes said results landed within its own guidance. Adjusted EBIT reached €8.2 billion compared with €13.7 billion in 2024. Net liquidity in the industrial business stood at €32.2 billion at year end, slightly higher than €31.4 billion the year before. Shareholders still got a total return above 20% in 2025, and Mercedes proposed a dividend of €3.50 per share. Mercedes reports full 2025 financial results across all divisions The cars division took the biggest punch. Adjusted EBIT at Mercedes Cars fell to €4.8 billion from €8.7 billion. Revenue dropped 10.5% to €96.4 billion. Unit sales declined 9.2% to 1,801,291 vehicles. Battery electric vehicle sales fell 8.8% to 168,823 units. Electrified vehicles overall reached 368,700 units, barely above last year. The xEV share rose to 20.5% of total sales from 18.5%. Adjusted return on sales at Mercedes Cars landed at 5.0%, down from 8.1%. Without tariffs it would have been 6.1%. Cash flow before interest and taxes dropped to €5.2 billion. The adjusted cash conversion rate improved to 1.2. Research and development spending declined year over year, while investments in property, plant and equipment increased due to new product launches. Cost savings under the Next Level Performance plan added more than €3.5 billion to EBIT. The vans division at Mercedes delivered an adjusted return on sales of 10.2%. That was lower than 14.6% in 2024 but still double digit. Unit sales fell 11.5% to 359,136 vans. Fully electric van sales jumped 46% to 28,488 units. BEVs made up 7.9% of global van sales and 11% in Europe. Revenue declined 11.2% to €17.1 billion. Adjusted EBIT reached €1.75 billion. Cash flow before interest and taxes fell to €951 million. Mercedes Financial Services reported adjusted EBIT of €1.27 billion, up from €1.13 billion. Adjusted return on equity improved to 9.7% from 8.7%. Total portfolio volume stood at €128.8 billion, down from €138.1 billion. New business reached €55.9 billion. Revenue in the unit slipped 1.8% to €24.6 billion. The finance arm merged with vehicle sales at the end of December 2025 to form a single customer-focused structure. Mercedes accelerates product launches and outlines cost cuts through 2027 In 2025, Mercedes launched the all-new CLA at the start of the year and ended the year with the new GLB and GLC. The CLA won Europe’s Car of the Year 2026 and Euro NCAP’s Best Performer among 2025 tested vehicles. Order books stretch well into the second half of 2026. Production runs on three shifts in some plants. Quarterly BEV volumes improved as the year went on. The upgraded S-Class now includes a new V8 engine and the MB.OS operating system. The model carries an updateable MB.OS Supercomputer, fourth-generation MBUX, and MB.DRIVE ASSIST PRO point-to-point assisted driving. China gets the system first, with the United States following later in 2026. Chief executive Ola Källenius said, “We successfully kicked off our biggest ever product and tech launch program in 2025. We are launching more than 40 new models in three years.” Looking ahead, Mercedes expects 2026 group revenue to match 2025 levels. Group EBIT should come in significantly above 2025. Free cash flow from the industrial business will likely sit slightly below 2025. Adjusted return on sales for cars is guided between 3% and 5%. Vans are guided at 8% to 10%. Financial Services return on equity is seen between 10% and 12%. Medium term, Mercedes targets around 2 million vehicle sales, with more than a 15% increase in Top-End sales and a doubling of xEV share. Global production capacity will be adjusted to about 2.2 million units by 2028. Assembly at the COMPAS joint venture in Mexico ends in 2026. Germany capacity will be 900,000 units and Hungary up to 400,000 units. Production costs per unit are set to fall 10% from 2027 versus 2024. Fixed costs should drop 10% between 2024 and 2027. Material cost savings are targeted at 8% by 2027 and 10% beyond that. In China, Mercedes aims to cut local material costs by 10%, variable production costs by 20%, and fixed costs by 20% by 2027 through local partnerships including Momenta and ByteDance. Don’t just read crypto news. Understand it. Subscribe to our newsletter. It's free .
