German premium automaker Mercedes-Benz on Wednesday reported a sharp decline in first-quarter profit, as intense competition in China continues to disrupt global carmakers, News.Az reports, citing AFP.

Net profit for the January to March period fell to 1.43 billion euros ($1.67 billion), down more than 17 percent compared with the same period last year, largely due to weakening performance in China.

“In China, intense competition and subdued demand continued to weigh on the market,” Mercedes said.

China, the world’s largest automotive market, has become a highly competitive battleground marked by an aggressive price war and rising pressure from domestic manufacturers such as BYD and Geely.

Mercedes said vehicle sales in China dropped by 27 percent in the first three months of 2026, even as the company recorded growth in both Europe and North America.

The company’s sales in China had already fallen to their lowest level since 2016 last year.

The fierce competition in the Chinese market, which has long been a key source of profits for German automakers, has also affected rivals across the industry. The Volkswagen Group, which owns brands including Audi and Porsche, has announced plans for 50,000 job cuts by the end of the decade.

Meanwhile, China’s BYD, the world’s largest electric vehicle manufacturer, reported earlier this week that its first-quarter profit had more than halved due to slowing domestic demand.

Despite the challenges, Mercedes reaffirmed its commitment to the Chinese market, saying it is working with local partners to develop “a new generation of China-fit vehicles.” The company highlighted the China-specific version of its electric GLC compact SUV, which was unveiled at the ongoing Auto China exhibition in Beijing.

News.Az 

By Nijat Babayev