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Mercedes-Benz became the third major German carmaker to lower its full-year outlook on Tuesday, citing challenging market conditions in China and rising material costs.
The company now expects its core profit for 2026 to remain flat at around €5.8 billion, despite previously forecasting an increase of at least 15%.
It also lowered its expected profit margin for its core car business to between 2% and 3%, down from its earlier forecast of 3% to 5%.
The carmaker reported preliminary third-quarter core profit of €1.77 billion, with a profit margin of 2.5% in its car division. Full third-quarter results are due on Wednesday.
Mercedes-Benz shares fell over 4% following the announcement, while Volkswagen and BMW both declined about 2%.
Both BMW and Volkswagen have already lowered their full-year forecasts, as weak demand and fierce competition from Chinese rivals such as BYD and Xiaomi continue to weigh on profits.
Mercedes-Benz's vehicle deliveries in China fell by a further 29% in the first nine months of 2026, after hitting their lowest level since 2016 last year.
Mercedes-Benz CEO Ola Kallenius has urged German employees to work additional hours without extra pay, while expanding production in Hungary, where he says costs are around 70% lower than in Germany.
Volkswagen plans to cut 120,000 jobs worldwide by the end of the decade, in what would be the largest restructuring in automotive history, surpassing the 50,000 jobs lost following General Motors' bankruptcy in 2009.