Mercedes-Benz Celebrates 100 Years With a 52-Week Low, Layoffs, and a China Wreck

Shares fall 30% year-to-date as China sales drop 27%, pushing Mercedes to aggressive cost cuts and workforce sacrifices, while analysts remain divided.

The century mark is usually a time for celebration, but for Mercedes-Benz it brought a new 52-week trough. The stock hit €42.64 on Monday morning — a grim birthday present for a group founded in 1926 as Daimler-Benz AG. Since January, the shares have shed roughly 30% of their value.

The slide reflects a perfect storm of internal and external pressures. First-quarter sales in China, the company’s most important market for high-margin metal, collapsed by 27%. The pain is concentrated where it hurts most: the S-Class and Maybach line-ups, precisely the models that underpin the “Luxury First” strategy championed by CEO Ola Källenius. As a result, the adjusted return on sales in the passenger-car division slumped to around 4.1%, scraping the bottom of management’s own target range.

To stem the bleeding, Mercedes-Benz has launched its most aggressive cost-cutting drive in years, branded “Next Level Performance.” The programme goes well beyond trimming fat in procurement or administration. Management is pushing to soften the 35-hour work week, demanding more hours without additional pay. A special bonus equal to 18.4% of a month’s salary has been officially deferred to 2027. The workforce is shouldering a large share of the burden. The pressure is already visible in the numbers: first-quarter EBIT fell 17% to €1.9 billion, leaving little room for compromise.

The austerity drive has now reached North America. Mercedes-Benz Research & Development North America has filed a WARN notice for its Long Beach, California, facility, where 72 employees will be let go effective July 6, 2026. Analysts read the move as a sign that research activities are being streamlined globally.

Yet the company is not retrenching everywhere. In a bid to diversify revenues and deepen customer loyalty, Mercedes is expanding into luxury real estate with “Branded Residences” in Dubai and Miami. It is also teaming up with Liquid AI, a specialist in on-board artificial intelligence, to integrate AI directly into vehicle hardware — a move designed to speed up processing, improve data privacy, and reduce cloud dependency.

The divergent initiatives have split the analyst community. Jefferies upgraded the stock to Buy with a €52 target, arguing that such drastic cost-cutting will eventually improve margins. UBS remains more cautious. Analyst Patrick Hummel sticks with Neutral and a €55 price target, pointing to the ongoing structural transformation sweeping the entire auto industry.

Technical indicators flash warning signs. The relative strength index has slipped from 31.4 to 30.5 — deep into oversold territory. Despite that, short-term chart signals generated Monday morning were bearish. The stock is trading at €43.46, barely above the day’s 52-week low of €42.64.

For investors, the next big test comes on July 14 with the pre-close call for the second quarter. Analysts expect a passenger-car margin of about 3.2% and a significantly stronger van margin of roughly 8.8%. The full interim report is due on July 28. By then, it will be clear whether the latest round of cost cuts is starting to shore up margins — or whether Mercedes will once again have to lower its full-year targets. The dividend offers some comfort: €3.50 per share was paid for 2025, and the consensus for 2026 is around €3.40. But with the stock near its floor and the labour dispute simmering, the anniversary celebrations feel a long way off.