Mercedes-Benz, Porsche Q3 Profits Plummet On US Tariffs, Weak Chinese Demand
News Summary
German automakers Mercedes-Benz and Porsche AG are facing significant financial challenges, with US tariffs, price wars, and slowing demand in key markets severely impacting their sales. Mercedes' Q3 net profit tumbled 31% to €1.19 billion, while Porsche recorded a net operating loss of €967 million. German carmakers are struggling across Europe, North America, and China, partly due to energy costs in Germany being three times higher than in the US. Germany's GDP has either flatlined or slowed in 10 of the last 12 quarters, with Q3 2025 stagnating. EU car exports to China are in
Background
Germany's economy in 2025 is grappling with multiple challenges, with GDP flatlining or slowing in 10 out of the last 12 quarters, including stagnation in Q3 2025. High energy costs (three times that of the US) and labor expenses further erode its industrial competitiveness. The global automotive industry is undergoing structural transformation, marked by rapid EV adoption and domestic brand dominance in the Chinese market. Concurrently, the Trump administration's protectionist trade policies, manifested as tariffs, exert continuous pressure on European exporters, including Germany. These factors collectively contribute to the sustained decline in profits and sales for German automakers, particularly premium brands, in key overseas markets.
In-Depth AI Insights
Beyond tariffs and weak Chinese demand, what underlying structural shifts are fundamentally challenging German auto giants' long-term competitiveness? Beyond the superficial issues of tariffs and Chinese demand, the challenges facing the German auto industry are more profound, reflecting fundamental shifts in the global economic and industrial landscape: - High Domestic Operating Costs: Germany's persistently high energy and labor costs place immense pressure on its manufacturing sector, particularly traditional high-margin auto production, eroding its global pricing competitiveness. - Sluggish EV Transition and Market Misalignment: Despite significant investments, German legacy automakers' EV product lines, especially in software and service integration, have failed to effectively meet the rapid iteration demands and consumer preferences of key markets like China, leading to swift market share erosion by domestic brands. - Reshaping Global Supply Chains and Trade Landscape: The escalation of US protectionism and geopolitical tensions are forcing global supply chains to prioritize resilience over efficiency. This could lead to a redirection of production bases and R&D investments away from Germany towards regions with cost advantages and greater political stability. Is Porsche's expectation of