S&P Cuts Mercedes-Benz to Negative Outlook as Shares Slide With Global Tech Selloff

Mercedes-Benz shareholders absorbed a double blow this week. S&P Global Ratings downgraded the Mercedes-Benz Group's credit rating on Thursday and set the outlook to negative, and the stock then shed 3.3% as a worldwide retreat from AI and semiconductor names dragged European equities lower.

The rating agency pointed to shrinking sales in China and intensifying competition in the Chinese premium segment. It also flagged tariffs and persistent cost inflation as pressures on the carmaker's credit profile. The negative outlook came as part of the same rating decision.

The share-price decline had no company-specific trigger, according to Reuters, which linked the broad weakness in European stocks to worries about AI stocks and possible restrictions on AI data centers. The drop came a day after the downgrade.

Margin Guidance Cut to 2–3%

Roughly two weeks ago, Mercedes-Benz lowered its full-year 2026 forecast for the adjusted return on sales at Mercedes-Benz Cars to a range of 2–3%, down from 3–5% previously. The company blamed a tougher market environment in China and higher costs in the fourth quarter, including elevated material costs.

Group EBIT is now expected to come in at the prior-year level rather than significantly above it as previously guided. Free cash flow from the industrial business is projected to land well below the previous year's figure.

Preliminary third-quarter 2026 results, released on October 28, showed group revenue of EUR 30.7 billion and EBIT of EUR 1.77 billion. Adjusted group EBIT fell 15% to EUR 1.78 billion. Mercedes-Benz Cars posted an adjusted return on sales of 2.5%, with adjusted EBIT in the passenger-car unit at EUR 560 million. Free cash flow from the industrial business totaled EUR 172 million on a preliminary basis.

Media reports also indicated the group reactivated a voluntary severance program aimed at employees in Germany outside production. Separately, Mercedes-Benz published a voting-rights notification concerning Daimler Truck Holding AG on Thursday, with the reported threshold being touched on October 30.

Analysts Split on Fair Value

Deutsche Bank Research kept its "Buy" rating on Mercedes-Benz on Monday following an event with Chief Financial Officer Harald Wilhelm. According to media reports, the brokerage reaffirmed its EUR 65 price target.

The DZ Bank cut its fair value to EUR 48 from EUR 55 on October 30, while leaving its "Kaufen" rating in place. The lender cited continued weakness in China in the passenger-car business as the drag.

Investors now look ahead to the confirmed Sustainability Update 2026 on November 10, 2026.