Mercedes-Benz writes off over 700 mn euros on China woes

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FRANKFURT: Mercedes-Benz has written down €704 million on its investments in China after intensifying competition and weakening demand in the world's largest car market hit its core automotive business. 

The German luxury carmaker said fierce rivalry from domestic manufacturers and slower sales forced the impairment, even as its overall quarterly net profit rose on the back of stronger performances from its vans and financial services divisions. 

The company reported that earnings in its Mercedes-Benz Cars division fell sharply, while vehicle deliveries in China dropped 30% during the quarter. 

Excluding the write-down, core car business earnings declined 26%, reflecting mounting pressure from aggressive pricing by Chinese rivals, subdued consumer demand and an ongoing transition across Mercedes' model lineup. Including the impairment, profits in the division plunged by almost 94%.

Citing persistent weakness in China, Mercedes also lowered its full-year outlook, forecasting both vehicle sales and group revenue to decline slightly from 2025 levels instead of remaining stable. 

Despite the setback, the automaker reiterated that China remains a strategically important market and said it would continue investing while pursuing cost-cutting measures and launching new models to remain competitive.