Mercedes-Benz has reported a significant downturn in its first-quarter profits, with a nearly 43% drop to 1.73 billion euros, attributing the decline to weakened demand in China and the uncertainties brought about by aggressive US tariff policies. The Stuttgart-based automaker also saw a 7% decrease in revenue to 33.2 billion euros, as global sales continued to shrink. The operational result before interest and taxes fell by 41% to 2.29 billion euros, reflecting the challenging market conditions.

The adjusted operating margin in the crucial passenger car division decreased by 1.7 percentage points to 7.3%, a smaller decline than analysts had feared. However, the company warned of significant profit pressures this year due to US import tariffs on cars. Mercedes-Benz stated that the current volatile developments and potential countermeasures make it difficult to reliably assess the impact on demand at this stage.

Without considering the enacted tariffs, the company's previous outlook statements would remain valid. However, Mercedes-Benz acknowledged that if the current trade policies persist, negative effects on the pre-interest and tax result, free cash flow, and operational margins across business areas are to be expected. The automaker had previously cautioned that a 10% US import tariff could reduce the operating margin of its car business by one percentage point.

The broader implications of US tariff policies on revenue and results remain unpredictable, making forecasts for the year impossible, according to Mercedes-Benz. The company's shares have struggled in recent months, losing more than a quarter of their value over the past year, with the stock showing little movement in early trading following the earnings announcement. Analysts have noted the challenges ahead, with some interpreting the company's outlook statements as a withdrawal of previous forecasts, underscoring the uncertainty facing the automotive industry amid global trade tensions.