German Car Output Slumps 18% in May as Mercedes-Benz Shares Hit New 52-Week Low on BMW Contagion

Mercedes-Benz shares hit 52-week low after BMW's profit warning, as German car production drops 18% amid China demand slump and rising EV costs.

Germany’s auto industry is showing fresh signs of strain. Passenger car production in the country dropped 18% in May from a year earlier, while exports slid 19%, according to data cited by the Stuttgart-based carmaker. The release came as Mercedes-Benz shares careened to a new 52-week low of €44.02 on Thursday, deepening a sell-off triggered by rival BMW’s dramatic profit warning.

The Munich-based luxury carmaker shocked markets on 17 June by slashing its earnings targets, citing an intensifying price war in China and geopolitical headwinds including tensions around Iran. The news sent BMW’s stock tumbling to €62.86 in pre-market trading — its weakest level since autumn 2020 — and dragged the entire premium segment lower. Mercedes-Benz initially lost 3.22% on the day, but the selling accelerated through the session, leaving the stock down around 5.5% at €44.32 and carving out a fresh 52-week trough at €44.02. A JPMorgan analyst called the development a “wake-up call for the auto industry”.

China squeeze hits both margins and volumes

The fundamental challenge for both manufacturers is the same: demand in China, the world’s largest car market, has softened, and competition has turned vicious. Mercedes-Benz had already flagged the difficult environment in its first-quarter results. The car division posted an adjusted operating profit (EBIT) of €933 million and a margin of 4.1%, within the full-year guidance range of 3% to 5% but leaving no room for additional headwinds. On an operating-profit basis, the division nearly halved to €809 million, according to a separate company filing.

Total vehicle sales reached 419,400 units in the first three months of the year. Growth in Europe and the United States only partially offset the shortfall in China. Group net profit came in at around €1.4 billion, weighed down by higher tariffs and the costly transition to electric vehicles. The vans division delivered a resilient performance, but was unable to fully compensate for the weakness in passenger cars.

Encouragingly, the push towards electrification is gaining traction at home. Pure battery-electric vehicle registrations in Germany jumped 39% in May, hitting nearly 60,000 units. Yet that shift also strains margins as manufacturers invest heavily in new platforms and battery supply chains.

Buyback programme offers little support

Mercedes-Benz has been buying back its own shares aggressively, but the exercise has proved poorly timed. By early June, the company had repurchased roughly 37.6 million shares at an average price of €53.19, spending almost €2 billion. The buyback programme itself remains authorised until November 2026, but with the stock now trading well below that average cost, the purchases have done little to stem the rout.

The technical picture is worsening. The relative strength index (RSI) has sunk to 28.8, deep into oversold territory, mirroring a reading of 31.6 noted after the initial sell-off. Analysts caution that oversold conditions alone do not constitute a buy signal — a genuine recovery will depend on an operational margin improvement in the current quarter. With the stock down roughly 28% since the start of the year and nearly 29% below its 52-week high of €62.30 hit in mid-December, investors are now waiting for second-quarter numbers this summer to see whether new models can stem the profit decline.