Outside China, the car business is holding up considerably better. European sales increased 5% to 168,700, including gains of 13% in Germany and 7% in the UK, while North America rose 4% to 83,200 and U.S. car sales advanced 6%.[3, 4] Mercedes-Benz says its total car volume outside China increased.[5] That makes the 8% global decline to 407,200 cars less a synchronized downturn than a geographically concentrated contraction whose severity in China is overpowering growth elsewhere.[5, 6]
China’s contraction is overwhelming resilience elsewhere
The concentration is becoming harder to describe as a single weak quarter. Mercedes sold 98,600 cars in China during the second quarter, 30% fewer than a year earlier, while first-half volume declined 28% to 210,200.[7] Third-quarter deliveries then fell 31% to 86,800, leaving nine-month sales at 297,000, down 29%.[8] By July, Mercedes was already forecasting a Chinese car market significantly weaker than the prior year, compared with a European market expected to remain around the previous year’s level and a U.S. market expected to be only slightly smaller.[9]
The more consequential deterioration is occurring above the volume line. Top-End vehicles accounted for 53,900 sales in the third quarter, or 13.2% of Mercedes-Benz Cars volume, after falling 21% year over year.[2, 5] China had already been hitting the economics of the cars division before that decline: Mercedes attributed earlier earnings pressure partly to tougher Chinese conditions and a less profitable model mix, alongside spending on model updates and launches.[9] In the second quarter, adjusted operating earnings from carmaking fell 26% to €909 million, while the average selling price declined to €64,700 from €67,700 a year earlier.[10] The cars division produced a 4% margin in that quarter against full-year guidance of 3% to 5%.[10]
That history changes the meaning of the 52% electric-vehicle growth rate. Electric passenger cars reached 68,400 units in Q3, up 61% from a year earlier and 29% from the previous quarter; electric vans reached about 9,600, up 12% year over year despite falling 4% from Q2.[1] Those gains are large enough to become an increasingly important part of Mercedes’ volume base, but the company simultaneously sold 8% fewer cars overall and 21% fewer Top-End vehicles.[2, 5] The unresolved question is therefore not whether Mercedes can raise EV deliveries, but whether those deliveries can eventually support the pricing and product mix that deteriorated as China weakened.
EV growth has yet to repair Mercedes’ pricing and mix
China is also the market where that transition faces its clearest competitive test. Reporting in July said even newer Mercedes products, including the electric CLA, were struggling against local alternatives offering buyers more technology and options.[10] Chinese manufacturers including BYD, NIO, Xiaomi and Huawei-backed Aito were described as having closed the technology gap and, in several areas, moved ahead of German competitors in cabin technology, software integration and EV range.[7] BMW and Mercedes were also fighting a Chinese price war that was eroding profitability.[10] A global EV sales record therefore cannot, by itself, establish that Mercedes’ electric lineup is repairing its position in the market responsible for the largest current decline.
That distinction matters because Mercedes is already getting the offset that the headline numbers imply. Europe is growing, North America is growing, and battery-electric sales are rising at double-digit rates.[1, 3, 4] Yet group sales of cars and vans still fell 6% to 491,700, even with van sales increasing 1% to 84,400.[6] The problem is not an absence of growth businesses; it is that their gains have not yet outweighed the contraction concentrated in China and the Top-End category.
The next proof point is consequently narrower than another record EV quarter. Mercedes entered Q3 after a 30% China decline in Q2 and exited it with a 31% decline, while Top-End sales fell 21% and the broader car business contracted 8%.[2, 5, 7, 8] Until those China and high-end trends begin to stabilize, a 52% rise in battery-electric sales remains an offset to the deterioration rather than evidence that Mercedes has rebuilt the economics being lost with it.[1, 10]