Mercedes-Benz: Chinese Rivals Surge in Europe as Shares Edge Closer to 52-Week Low

Mercedes' EU sales inch up 0.7% in May while BYD and Chery surge over 150%. BEV share hits 20%, stock near 52-week low. Q2 results July 28.

The European auto market is expanding, but the disparity in growth rates between Mercedes-Benz and its Chinese competitors is becoming impossible to ignore. While the Stuttgart-based manufacturer posted a modest 0.7% increase in EU registrations for May 2026, with 47,507 new vehicles, BYD and Chery delivered jaw-dropping leaps of 158.8% and 239.6%, reaching 26,017 and 16,282 units respectively over the same period. SAIC Motor has already surpassed 100,000 EU registrations in the first five months of the year.

Mercedes-Benz’s cumulative January-to-May tally of 230,313 vehicles represents a 3.2% year-on-year improvement, and its market share held steady at 4.9%. Yet the underlying shift in powertrain technology underscores the challenge. Battery-electric vehicles now account for 20.0% of all new EU registrations in the first five months of 2026, up from 15.3% a year earlier, while the combined share of petrol and diesel cars has slumped to 30.1% from 38.0%. The company is responding with a product offensive of more than 40 new models between 2025 and 2027, and its own BEV sales in Europe climbed 34% in the first quarter. Whether that pace is enough to counter the rapid scaling of Chinese rivals remains an open question.

Operationally, Mercedes-Benz delivered a solid first quarter: revenue of €31.6 billion, free cash flow from the industrial business of €1.86 billion, and an adjusted return on sales of 4.1% for the car division, within the full-year guidance. But the stock tells a different story. Shares closed at €45.10, extending year-to-date losses to 26.84%, and the 52-week low of €43.99 is just 3% away. The stock trades more than 18% below its 200-day moving average, and the Stoxx Europe 600 Autos & Parts index briefly fell 1.5% on Tuesday to its lowest since March.

The pressure is not purely external. Management is also wrestling with cost structures at home. Personnel chief Britta Seeger has warned employees of difficult times ahead, as new US tariffs and global competition force deeper cost reviews. A longstanding agreement prohibits compulsory redundancies until 2034, so the company is turning to artificial intelligence to boost productivity. In just 18 months, the workforce has doubled its use of AI to 60%, and the target is 70% by the end of the year. The strategy shift from “Electric Only” to “Electric First” means modern combustion-engine models will now be built well into the 2030s, a pragmatic nod to actual demand that analysts have welcomed.

Short-term traders see a glimmer of hope in the relative strength index, which sits at 33.9, edging into oversold territory. The long-term trend, however, remains firmly bearish. All eyes are now on July 28, when Mercedes-Benz will report second-quarter results and management will have to demonstrate whether the margin can hold up against aggressive pricing and rapid model cycles from Chinese automakers. Until that answer becomes clear, the valuation discount looks set to persist.