Mercedes-Benz writes off €704 million as China competition hits car profits

Mercedes-Benz booked a 704 million-euro non-cash write-down on its Chinese investments as fierce competition in China hit profit at its core car business.

The German carmaker said on Tuesday that overall quarterly net profit rose 13.5 percent to 1.09 billion euros, helped by its vans and financial services businesses. But core earnings at the cars division fell 26 percent to 909 million euros.

The car division figure excludes the 704 million-euro write-down. Including that charge, profit at the Mercedes-Benz car business fell almost 94 percent.

Mercedes said the Chinese market and customers in China remained strategically important, but added that “intense competition, subdued demand and the portfolio-wide model changeover” continued to affect sales.

Vehicle deliveries in China fell 30 percent in the quarter, the company said. Mercedes now expects annual sales to shrink by up to 7.5 percent from the 2025 level of 132.2 billion euros, compared with its previous forecast for roughly unchanged sales growth.

The source said other German carmakers have also been hit by competition in China, including Volkswagen, Porsche and BMW.