Mercedes-Benz Faces a Critical Earnings Test as China Sales Slide and EV Orders Surge

Mercedes-Benz faces a 45% EPS drop in Q1 as China sales collapse 27%, while EV sales rise 11% and U.S. demand surges 20%, testing margin resilience.

The Stuttgart automaker heads into Wednesday’s first-quarter earnings report with its stock nursing a 20% decline from the 2025 peak, leaving investors to weigh whether a deeply divided sales picture has already carved into margins. Shares slipped another 1.7% on Monday to €49.33, hovering just 1.8% above the 52-week trough and more than 11% below the 200-day moving average — territory that typically keeps technical traders on edge.

A Tale of Two Markets

Mercedes-Benz delivered roughly 419,000 passenger cars worldwide in the first three months of the year, a 6% drop from the same period last year. The headline number, however, masks a stark regional divergence. China, the company’s single largest market, saw deliveries collapse by 27%, a decline management attributes to a model changeover as several entry-level nameplates are phased out and their successors ramp up. The company has framed 2025 as a transitional year for China and does not expect a meaningful recovery there until 2027.

Strip out China, and the picture flips entirely. Global sales excluding the Asian giant rose 5%, with the United States surging 20% and Europe adding 7%. The German home market also posted gains. That dichotomy has left analysts questioning how deeply the China shortfall will cut into profitability when Finance Chief Harald Wilhelm presents the full interim report on April 29.

Electric Momentum Offers a Counterweight

One area where the numbers tell a cleaner story is the battery-electric vehicle segment. Mercedes sold roughly 50,400 all-electric cars in the first quarter, an 11% increase group-wide. Europe led the charge with a 34% jump, while Germany posted a 36% gain. The new electric CLA, now running on three production shifts, has booked orders stretching deep into the second half of the year, according to the company. The upcoming electric GLC has also generated a record number of pre-orders, signaling that the product pipeline retains strong appeal even as the combustion-engine business faces headwinds.

What the Numbers Are Expected to Show

Analysts forecast first-quarter earnings per share of around €1.43, a steep drop from €2.57 a year earlier — a decline of nearly 45%. Revenue is also expected to slip. The comparison is complicated by the fact that 2024 was itself a difficult year for Mercedes, with operating profit falling to €8.2 billion.

For the full year, management has guided for earnings before interest and taxes significantly above 2025 levels, with revenue roughly flat. Whether that outlook survives Wednesday’s report depends heavily on how much the China-driven volume loss has compressed margins in the quarter. A miss on profitability could send the stock below the €50 support level that chart watchers have flagged as critical.

Buybacks Signal Confidence, but the Market Needs Proof

Mercedes has been buying back its own shares since November, with €1.7 billion remaining under the current program — a clear signal that the board considers the current valuation attractive. The stock trades at a forward price-to-earnings ratio of under 10, reflecting the market’s skepticism about near-term earnings power.

Wilhelm’s conference call on Wednesday will need to do more than reiterate the full-year forecast. Investors want to see whether the China transition is progressing on schedule, whether the EV ramp is translating into margin improvement, and whether the broader cost discipline holds. The stock has already priced in considerable risk. The question is whether the first-quarter numbers confirm that the worst is behind Mercedes — or that more pain lies ahead.