Mercedes-Benz Chases 2028 Autonomous Rollout While Cost Cuts and China Woes Weigh on the Stock

Mercedes-Benz signs binding Wayve deal for 2028 assisted driving while Q2 revenue slips to 32.06 billion euros and China deliveries drop 30 percent.

Mercedes-Benz is pressing ahead with a two-track strategy that pits futuristic technology against present-day financial strain. On Wednesday, the Stuttgart-based automaker signed a binding series-production agreement with British AI startup Wayve, targeting 2028 for the rollout of its "Wayve AI Driver" software for assisted driving in urban and highway traffic. Integration into future vehicle models is slated to take place within the next two years.

The deal lands at an awkward moment for the company's share price. The stock is currently trading at 41.12 euros, down 32 percent since the start of the year, and investors are casting a wary eye on the group's operating performance.

A Core Business Under Siege

While spending on autonomous driving systems is meant to secure the company's future, its traditional business is coming under mounting pressure. Weak sales figures and fierce competition are visibly eroding profitability.

The second quarter of 2026 laid those difficulties bare. Group revenue slipped to 32.06 billion euros, with EBIT coming in at 1.55 billion euros. The pain was sharpest in China, where passenger car deliveries collapsed by 30 percent. A writedown on joint ventures in the country added a further 704 million euros to the damage, while the adjusted return on sales for the passenger car division stood at just 4.0 percent. The figures underscore how heavily the group's earnings hinge on demand in that market.

For management, the downward trend translates into heightened urgency to bring cost structures in line with a shifting marketplace.

Labor Costs in the Crosshairs

According to media reports, the automaker is targeting savings of 800 million euros on German labor costs. Among the levers under consideration are unpaid additional working hours as well as cuts to Christmas and holiday pay or special bonuses. The company declined to comment on the report.

To lend weight to the savings push, production chief Michael Schiebe reportedly threatened to close one passenger car plant and one powertrain plant in Germany. The measures illustrate just how severe the impending cuts at domestic sites could be. Reinforcing that direction, the company agreed more than a month ago to sell its Berlin dealerships to Global Auto Holdings, with completion scheduled for the end of 2026.

The pressure on the home base is not new. On Tuesday, Mercedes-Benz stated that production in Germany was no longer competitive by international standards and that two plants were under pressure. The group is already reducing headcount in the country to counter costs. Three German federal states weighed in on September 17, calling for faster support measures for the industry amid the sweeping upheaval.

Analysts Stay on the Sidelines

Caution dominates on the capital markets. Bernstein Research kept its "Market-Perform" rating on the stock on Wednesday with a price target of 56 euros; analyst Harry Martin pointed to the persistent challenges in China. Berenberg had already trimmed its target from 56 to 52 euros on September 15, maintaining a "Hold" rating. Analyst Romain Gourvil attributed the adjustment to a lack of near-term positive catalysts.

Investors will get fresh insight into the company's financial health on October 28, when Mercedes-Benz publishes its interim report for the third quarter of 2026.

China Dialogue and a Tech Bet

The Asian region remains a strategic priority for the automaker. Following a video call with CEO Ola Källenius, China's trade minister said on Tuesday that the People's Republic continues to welcome investment from European manufacturers.

On the markets, the operational hurdles are reflected in the share price. The stock currently sits at 41.55 euros, just above its 52-week low of 41.05 euros, with a year-to-date decline of 31 percent.