Mercedes-Benz Faces Margin Squeeze as Citi Trims Target and China Deliveries Tumble 31%

Mercedes-Benz stock slid 2.3% to EUR 38.97 after Citi trimmed its price target, as Q3 China deliveries fell 31% and group sales slipped 6%.

Mercedes-Benz shares closed Wednesday at EUR 39.90, and the stock came under renewed pressure Thursday, shedding 2.3% to trade at EUR 38.97. The decline unfolded against a broadly weaker backdrop for European automakers, with rising oil prices and elevated bond yields sapping investor appetite for the sector.

The near-term narrative darkened further after Citi cut its price target on the Stuttgart-based manufacturer, keeping a "Neutral" rating on the stock. The US bank pointed to mounting earnings pressure bearing down on European carmakers through the second half of 2026.

China's Drag on the Top Line

Hard numbers from the third quarter underscore why analysts are turning cautious. Passenger car deliveries in China — long a cornerstone of profitability for Germany's premium brands — plunged 31% to 86,800 units. That contraction rippled outward: group-wide passenger car and van sales slipped 6% year-on-year to 491,700 vehicles. In the passenger car segment alone, Mercedes-Benz posted an 8% decline worldwide.

The scale of the China setback matters beyond a single quarter. Sustained weakness in Chinese demand fuels concern among investors about the group's future earnings power, particularly as competition across Asia remains fierce and continues to weigh on margins at established manufacturers.

Battery-Electric Sales Offer a Partial Counterweight

Not every line item moved in the wrong direction. Battery-electric vehicle deliveries climbed 52% to 78,100 units globally, providing a meaningful offset to the erosion in combustion-engine volumes. Even so, the EV surge does not fully compensate for the shortfall in the traditional core business.

Smaller markets also delivered pockets of growth. In India, Mercedes-Benz reported a 6% increase in third-quarter sales, reaching 5,422 vehicles.

Buybacks Continue to Support the Share Price

Management has kept its capital-return machinery running while the industry navigates these headwinds. Between September 28 and October 2, the company repurchased 875,000 of its own shares on the open market. Since the program began on September 1, cumulative buybacks through October 2 totaled 3,851,805 shares.

Those transactions reduce the supply of freely tradable stock, a lever the company is pulling to underpin the share price as investor skepticism about profitability builds.

Partnership Extension and the Road Ahead

On the strategic front, FUCHS SE and Mercedes-Benz extended their partnership on October 1. Investors will get a fuller picture of how these crosscurrents are shaping the balance sheet when the group publishes its third-quarter interim report on October 28, 2026, according to the financial calendar.