Mercedes-Benz: A Summer of Mixed Signals as Analysts Cheer and China Bleeds

Mercedes-Benz shares hover near 26% off peak as China sales slump and recall costs weigh, despite Buy ratings from Goldman and Deutsche Bank.

The German automaker's stock is hovering at a technical crossroads, caught between a chorus of bullish analyst ratings and the cold reality of a deteriorating Chinese market. Shares closed Friday at EUR 45.99, up 0.7 percent on the day, but the modest bounce masks a deeper struggle: the equity remains roughly a quarter below its January level and 26 percent off the December peak of EUR 62.30.

What makes the current setup particularly awkward for investors is the disconnect between Wall Street's optimism and the fundamental picture emerging from Stuttgart. While Goldman Sachs and Deutsche Bank both reaffirmed their "Buy" ratings in early August, the company simultaneously disclosed a EUR 704 million impairment on a Chinese joint venture — a stark reminder that the analyst community's enthusiasm has yet to be validated by actual performance in the world's largest auto market.

The China Problem Won't Stay Quiet

Second-quarter figures laid bare the scale of the challenge. Group revenue slipped to EUR 32.06 billion, with reported EBIT of EUR 1.55 billion weighed down by the China-related writedown. Deliveries in the country collapsed by 30 percent, forcing management to walk back its full-year guidance: instead of matching last year's revenue, the company now anticipates a slight decline.

The launch of the GLC L EV was supposed to be the turning point. When pre-orders opened on July 8, the response was electric — 12,000 reservations within 24 hours. But the first full month of sales told a more sobering story: just 1,438 vehicles actually registered. Whether the gap reflects supply constraints or buyer hesitation, the early evidence suggests that enthusiasm in the showroom isn't yet translating into momentum on the road.

A Van Business That's Holding the Line

Not every division is struggling. The Vans segment delivered a counterpoint to the passenger car weakness, lifting sales to 94,100 units and growing revenue 5 percent to EUR 4.46 billion, with an adjusted return on sales of 10.2 percent. The division's resilience comes as the company showcases new products — the Marco Polo and Marco Polo HORIZON debuted at the Caravan Salon Düsseldorf, featuring a first-ever torque-on-demand all-wheel-drive system for Sprinter-based motorhomes — while a partnership with ChargePoint targets fleet electrification across the UK and Germany.

Passenger cars, by contrast, saw adjusted margins compress to 4.0 percent, a figure that beat the 3.5 percent consensus but still underscores the pricing pressure and demand softness rippling through the core business.

Recall Fallout and Regulatory Moves

Adding to the operational noise, Mercedes has initiated a US recall covering 310,667 vehicles across model years 2019 through 2026 — spanning A-, C-, CLA-, CLE-, GLA-, GLB- and GLC-class models, including AMG variants — over a potential rollaway risk linked to a corroded microswitch. The financial and reputational costs remain unquantified, leaving a lingering overhang that could complicate the bull case if details worsen.

On the regulatory front, the European Commission on Monday approved the sale of seven Mercedes-Benz dealerships in Berlin and Brandenburg to Britain's Global Auto Holdings. The transaction, which involves more than 1,100 employees, is expected to close by year-end as part of a broader restructuring of the company's German retail network.

Restructuring, Legal Wins, and What Comes Next

The dealership divestment is just one piece of a wider cost-containment effort. Between April 2025 and the end of March 2026, roughly 5,500 administrative staff accepted voluntary severance packages from a program offered to about 40,000 non-production employees, with some payouts exceeding EUR 500,000. Meanwhile, the company has been in exclusive talks with BNP Paribas over the sale of its Athlon leasing subsidiary for around EUR 1 billion, targeting completion in the third quarter.

There was also a measure of legal relief: in July, Mercedes largely prevailed in the first stage of diesel emissions litigation in the UK, with another hearing scheduled for October.

Reading the Technical Tea Leaves

The stock's chart tells a story of consolidation rather than conviction. Trading precisely at its 50-day moving average and well below the 200-day average — a gap of roughly 14 percent — the shares have recovered about 8 percent from the yearly low of EUR 42.64 but remain trapped in a sideways pattern. The relative strength index sits at 47.4, close to the neutral midpoint, offering little directional clarity.

The analyst landscape is less unified than it first appears. Jefferies' upgrade to "Buy" came back in late June, meaning it's no longer fresh news, while RBC maintains a "Neutral" stance. The apparent cluster of positive ratings in early August masks the fact that the most recent endorsements are simply confirmations of existing positions.

The Path Forward

For bulls, the combination of reaffirmed Buy ratings from two major houses and a product pipeline that spans new vans, charging partnerships, and a return to physical controls — CEO Ola Källenius has confirmed future models will feature more tactile interfaces, as demonstrated by the new CLA's physical volume knob on the steering wheel — suggests a company addressing multiple fronts simultaneously. A stabilizing demand picture could push the stock toward the 100-day moving average at EUR 48.54.

Bears, however, point to the unresolved recall costs, the persistent China drag, and a technical structure that remains firmly downtrending on the longer timeframe. Should sentiment sour — whether through new recall details or additional skeptical voices joining RBC — a retest of the yearly lows becomes a live risk.

The next significant checkpoint arrives October 28, when third-quarter results will reveal whether China's weakness is stabilizing or deepening. Until then, investors are left weighing analyst confidence against a fundamental reality that has yet to cooperate.