Mercedes-Benz recorded its strongest-ever quarterly electric vehicle sales in the third quarter of 2026, with BEV deliveries climbing 61% year-on-year. However, intensifying competition in China, currency headwinds and higher costs forced the German automaker to lower its full-year financial outlook, despite improved reported operating profit.
Mercedes-Benz Group has reported a mixed set of financial results for the third quarter of 2026. While the company achieved record battery-electric vehicle (BEV) sales, continued to expand its presence in Europe and the United States, and benefited from strong performances in its van and financial services divisions, challenging market conditions in China continued to weigh heavily on its passenger car business.
The Stuttgart-based manufacturer recorded third-quarter revenue of €30.7 billion, compared with €32.1 billion during the same period last year. Reported Group EBIT increased substantially to €1.77 billion, up from €750 million in Q3 2025, while net profit rose to €1.52 billion from €1.19 billion.
However, the improvement in reported operating profit requires some context. It was primarily driven by lower adjustments compared with the previous year’s third quarter. Adjusted Group EBIT, which provides a clearer picture of underlying operating performance, actually declined by 15%, reaching €1.78 billion compared with €2.10 billion a year earlier.
According to Mercedes-Benz CEO Ola Källenius, the company’s new models are attracting customers, particularly in Europe and the United States, but the global business environment has become increasingly difficult.
The company is responding through tighter cost controls, productivity improvements and continued investment in new technologies, while relying on the financial strength of its industrial business to navigate the changing automotive landscape.
Record Mercedes-Benz electric car sales in Q3 2026
One of the most encouraging developments during the third quarter was the performance of Mercedes-Benz’s electric vehicle portfolio.
The company achieved its highest-ever quarterly BEV sales, with deliveries increasing by 61% compared with Q3 2025 and 29% compared with the second quarter of 2026. Battery-electric vehicles accounted for a record 16.8% of global Mercedes-Benz passenger car sales.
When plug-in hybrids are included, electrified vehicles represented 25% of the company’s worldwide passenger car sales.
Europe was particularly important to this performance. Almost one in every two Mercedes-Benz passenger cars sold in the region featured an electrified powertrain, while fully electric models accounted for approximately one-third of deliveries.
Customer demand for the latest electric models remains encouraging, with order books for several important vehicles in Europe extending well into 2027.
The figures suggest that Mercedes-Benz’s extensive product renewal programme is beginning to deliver meaningful results, particularly as the company expands its electric offering across different vehicle segments.
The new electric GLC has been an important contributor to the positive momentum in the Core segment outside China, while the all-new CLA has helped strengthen the Entry segment. The electric GLC also received the German Premium Car of the Year 2027 award, further reinforcing the model’s position in the premium electric SUV market.
The new CLA, meanwhile, has received significant industry recognition, having been named Car of the Year 2026 and earning the Best Performer distinction in Euro NCAP safety testing.
Another important development came from the flagship S-Class. As production of the updated model ramps up, sales outside China more than doubled compared with the second quarter of 2026. The new S-Class subsequently received the 2027 MotorTrend Car of the Year award in October.
Despite these positive developments, Mercedes-Benz Cars delivered 407,232 vehicles worldwide during the third quarter, an 8% decrease compared with the 441,453 units sold in the same period of 2025.
The main reason was the challenging Chinese market, where increasingly aggressive competition continues to put pressure on established premium manufacturers.
Europe and the United States compensate for China’s slowdown
Mercedes-Benz is increasingly relying on markets outside China to support its passenger car business.
During Q3 2026, sales outside China continued to develop positively for the third consecutive quarter. European deliveries increased by 5%, with Germany recording particularly strong growth of 13%. Sales in the United States also improved, rising by 6%.
The positive performance demonstrates the importance of the company’s new product portfolio, which is helping Mercedes-Benz maintain customer interest despite a difficult global automotive environment.
However, the Chinese market remains a significant challenge. Intense competition, pricing pressure and changing customer preferences have reduced the earnings contribution from the region.
For Mercedes-Benz, China remains one of its most important markets, making the ability to defend its premium positioning and improve profitability there a central part of its strategy.
Mercedes-Benz Cars profitability under pressure
Although reported EBIT at Mercedes-Benz Cars increased by 5.8% to €455 million, compared with €430 million in Q3 2025, the underlying financial performance was considerably weaker.
Adjusted EBIT dropped to €560 million from €1.139 billion in the previous-year quarter. The adjusted return on sales consequently declined from 4.8% to 2.5%.
For the first nine months of 2026, Mercedes-Benz Cars achieved an adjusted return on sales of 3.5%.
The decline reflects several factors, including unfavourable currency movements, lower earnings from China, increased expenditure on marketing campaigns surrounding new model launches and costs associated with product lifecycle measures.
Efficiency improvements helped offset some of these pressures, but not enough to prevent a significant decline in adjusted profitability.
The company is currently completing its largest-ever product launch programme, which requires substantial resources but is intended to strengthen its competitiveness across the premium passenger car market.
Mercedes-Benz Vans and Financial Services deliver strong results
While the passenger car division faced considerable pressure, Mercedes-Benz Vans and Mercedes-Benz Financial Services provided important support for the Group’s overall financial performance.
Mercedes-Benz Vans recorded third-quarter sales of 84,421 vehicles, representing a 1% increase compared with the previous year.
Growth was particularly strong in the Rest of the World region, where deliveries increased by 25%, while North America recorded an 8% improvement. Sales of electric vans also developed positively, increasing by 12% year-on-year.
The division generated adjusted EBIT of €397 million, slightly below the previous year’s result. Its adjusted return on sales reached 9.4% in Q3 2026, while the nine-month figure stood at 9.9%, placing the business at the upper end of its expected range.
Profitability was affected by pricing pressure and preparations for the introduction of the new Van Architecture, which represents the largest product investment programme in the history of Mercedes-Benz Vans.
The company also used September’s IAA Transportation 2026 to showcase its commercial vehicle portfolio and the Mercedes-Benz PRO digital ecosystem, designed to provide professional customers with integrated vehicle and fleet-management solutions.
One of the main attractions was the all-new electric VLE, presented in an eight-seat configuration designed for professional shuttle services.
Mercedes-Benz Financial Services delivered an even stronger performance.
Adjusted EBIT increased by 42% to €445 million in the third quarter, compared with €313 million in Q3 2025. For the first nine months of 2026, adjusted EBIT climbed by 52% to €1.35 billion.
The improvement was supported by higher portfolio margins, a favourable development in credit risk costs and disciplined expense management.
The division’s adjusted return on equity increased to 13.8%, compared with 9.6% in the same period last year.
Financing and leasing remain an important part of the Mercedes-Benz business model, with nearly one in every two vehicles sold supported by Mercedes-Benz Financial Services.
Mercedes-Benz accelerates investment in AI and software-defined vehicles
Beyond its financial results, Mercedes-Benz is continuing to expand its technology strategy, with artificial intelligence and software-defined vehicles playing increasingly important roles.
The company’s proprietary MB.OS operating system is being introduced across all new and updated Mercedes-Benz models, regardless of their powertrain configuration.
The objective is to create vehicles that can receive over-the-air software updates across multiple vehicle systems, including driver assistance technologies.
Following its introduction in China and the United States, point-to-point assisted driving is scheduled to arrive in the first German cities by the end of 2026.
Mercedes-Benz is also strengthening its collaboration with NVIDIA to develop the next generation of driver assistance and automated driving systems. The partnership combines Mercedes-Benz engineering expertise and its MB.OS platform with NVIDIA’s computing capabilities and artificial intelligence technologies.
The company is also maintaining a multi-technology powertrain strategy, offering customers fully electric vehicles alongside advanced combustion engines equipped with 48-volt hybrid technology.
Artificial intelligence is also being integrated into the company’s internal operations.
One of the most important initiatives is PLM.AI, a new AI-native digital backbone designed to connect product development, procurement, production, sales and after-sales operations.
Mercedes-Benz expects the system to reduce product development times by up to 30%.
In manufacturing, AI applications are already being integrated into the MO360 digital production ecosystem to support quality control and improve operational efficiency.
The company is also working to automate administrative and sales processes, with the objective of accelerating decision-making, reducing complexity and freeing up resources for innovation.
These investments are part of a broader transformation aimed at making Mercedes-Benz faster, more efficient and more competitive in an automotive industry increasingly shaped by software, electrification and artificial intelligence.
Mercedes-AMG expands its performance SUV portfolio
Mercedes-Benz is also continuing to expand its high-performance product offering.
Earlier in October, Mercedes-AMG presented the new Mercedes-AMG GT SUV, the first full-size SUV developed entirely in-house during the brand’s 59-year history.
The model is the second vehicle based on the AMG.EA high-performance architecture, following the recently unveiled Mercedes-AMG GT 4-Door Coupé.
The introduction of the new SUV demonstrates the importance of performance-oriented electric vehicles in Mercedes-AMG’s future strategy, as the brand looks to combine its traditional driving character with next-generation electric technology.
Mercedes-Benz intensifies cost-cutting measures
Despite its record electric vehicle sales and strong performances in several business divisions, Mercedes-Benz is maintaining a strict approach to expenditure.
During the first nine months of 2026, investments in property, plant and equipment, together with research and development expenditure at Mercedes-Benz Cars, decreased by 11% compared with the previous year.
This follows an investment peak associated with the company’s extensive product launch programme.
Mercedes-Benz has also intensified its global productivity measures since June, with particular attention given to its German operations.
The company has already reduced fixed costs by approximately 25% since 2019 and plans to offer another voluntary severance programme for employees in indirect functions in Germany starting in December 2026.
During the first three quarters of 2026, Mercedes-Benz spent €6.4 billion on research and development and invested €2.9 billion in property, plant and equipment.
At the same time, it returned €5.2 billion to shareholders through dividends and share repurchases.
Despite these substantial expenditures, net liquidity in the industrial business remained relatively stable at €31 billion as of September 30, 2026, compared with €32.2 billion at the end of 2025.
The funding ratio of the company’s pension plans also improved, reaching 119%, compared with 113% at the end of 2025.
However, free cash flow from the industrial business declined considerably. It reached €3.1 billion during the first nine months, compared with €5.6 billion in the same period of 2025.
In Q3 alone, free cash flow amounted to €172 million, down from €1.367 billion a year earlier.
The decline was primarily associated with higher working capital requirements, particularly increased inventories of new vehicles expected to reach customers in the coming months.
Cash outflows of approximately €1.1 billion related to restructuring measures also affected the nine-month result.
Mercedes-Benz lowers its 2026 financial outlook
The increasingly difficult market environment, particularly in China, has forced Mercedes-Benz to revise its expectations for the full 2026 financial year.
The most significant adjustment concerns Mercedes-Benz Cars, where the company now expects an adjusted return on sales of between 2% and 3%, compared with its previous forecast of 3% to 5%.
The expected adjusted cash conversion rate has been increased to a range of 1.2 to 1.4, from the previous forecast of 1.0 to 1.2.
Investments in property, plant and equipment at Mercedes-Benz Cars are now expected to be significantly below the previous year’s level, rather than slightly below it.
At Group level, Mercedes-Benz now expects EBIT to remain around the previous year’s level, replacing its earlier forecast of a significant increase.
The outlook for free cash flow in the industrial business has also been reduced. The company now expects it to be significantly below the previous year’s level, compared with its earlier guidance of slightly below the prior-year figure.
For Mercedes-Benz Vans, the forecast for unit sales has been adjusted to approximately the previous year’s level, compared with the earlier expectation of slight growth.
The revised guidance reflects the combination of weaker market conditions in China, higher raw material costs expected in the fourth quarter and additional expenditure related to product lifecycle measures.
A challenging year for Mercedes-Benz despite record EV momentum
Mercedes-Benz’s third-quarter 2026 results illustrate the difficult balancing act facing traditional premium automakers.
On one side, the company is achieving encouraging progress in electrification, with record BEV sales, strong demand for new models and improving sales momentum across Europe and the United States.
On the other, declining adjusted profitability at Mercedes-Benz Cars, intense competition in China and significant transformation costs are limiting the financial benefits of this progress.
The strong performances of Mercedes-Benz Vans and Financial Services, together with the Group’s substantial industrial liquidity, provide important financial support as the manufacturer continues investing in its future.
The next challenge will be converting its expanding electric vehicle portfolio, software capabilities and AI investments into sustainable growth and stronger operating margins.
For Mercedes-Benz, the remainder of 2026 will therefore be less about chasing sales volumes at any cost and more about improving efficiency, protecting profitability and ensuring that its extensive product renewal programme delivers the financial returns expected by investors.
Source: Mercedes-Benz