Frankfurt, Feb 12, 2026, 11:27 CET — Regular session
- Shares dropped roughly 2.5% following Mercedes-Benz’s warning of a slimmer margin in its car unit for 2026.
- The group suggested a €3.50 dividend, continued its share buyback, and announced new cost-cutting measures.
- Traders are keeping an eye on tariffs, China’s demand, and the speed at which savings translate into cash flow.
Shares of Mercedes-Benz Group AG (MBGn.DE) fell 2.5% to 56.52 euros in Frankfurt on Thursday. The drop came after the automaker forecast a weaker profit margin for its cars division in 2026. Mercedes now anticipates an adjusted return on sales—operating profit as a percentage of revenue—between 3% and 5%. Meanwhile, the company expects group revenue to stay flat, with industrial free cash flow dipping slightly. 1
The outlook looks grim for a sector that’s already relying heavily on margins as its fastest indicator of pricing power, particularly in China. Early trading saw shares of BMW, Volkswagen, and Porsche stumble. Bernstein analyst Stephen Reitman pointed out that even the high end of Mercedes’ margin forecast fell short of what the market anticipated. 2
Mercedes reported adjusted EBIT, excluding some one-offs, dropped to 8.2 billion euros in 2025 on revenues of 132.2 billion euros. Free cash flow from its industrial business—the cash left after investments—came in at 5.4 billion euros. The company proposed a 3.50-euro dividend per share and noted that its 2 billion-euro buyback, started in November, still has up to 1.7 billion euros left for 2026. It also set a target to cut production costs per unit by 10% from 2024 levels starting in 2027. CEO Ola Kaellenius said, “Our financial results remained within our guidance.” 3
In a separate update, Mercedes pointed fingers at tariffs for much of the profit hit. Operating profit (EBIT) plunged to 5.8 billion euros in 2025, more than half down, dragged by around 1 billion euros in tariff costs and negative currency impacts. This fell short of the 6.6 billion-euro forecast from a Visible Alpha poll. The company confirmed plans for deeper cost cuts and new product launches to claw back toward an 8% to 10% margin in car sales over time. 4
China continues to be a challenge. CFO Harald Wilhelm told analysts that sales keep dropping there, and the company remains “maintaining a cautious outlook” while hoping new models will boost results in the second half. He also flagged 1.6 billion euros in restructuring costs for 2025 linked to workforce measures. 5
Some analysts interpret the reset as structural. Kepler Cheuvreux analysts described the downward revision of Mercedes’ mid-term margin target as “another round of accounting for the new reality of the auto industry,” adding that tariffs now seem factored into the guidance. 6
Corporate filings reveal that Morgan Stanley’s stake in Mercedes climbed to 7.79% when factoring in financial instruments, while direct share ownership stood at 0.15%, following a threshold breach on Feb. 5. 7
The danger remains that the 3%-5% margin range might be too optimistic if the price war in China intensifies or tariffs come back into play. Fluctuating currencies and cost reductions falling short could further tighten cash flow, limiting funds available for shareholder payouts.
Investors should note the annual report is due March 4, followed by the dividend vote at the annual meeting on April 16. First-quarter results will be released April 29. 8
