The tariff shock hits Mercedes and Porsche

Money.it

30 July 2025 - 17:16

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The trade war is hitting German luxury car brands Mercedes-Benz and Porsche. The two automakers are revising down their full-year guidance, anticipating a severe downturn.

The tariff shock hits Mercedes and Porsche

A negative impact of Trump’s tariffs of approximately $400 million is weighing on German automakers Mercedes-Benz and Porsche (Volkswagen’s luxury brand).

In their quarterly earnings presentations, both brands lowered their forecasts for the year and lowered their overall business guidance, primarily due to an uncertain global economic environment and the tariff policy implemented by the US.

German luxury carmaker Mercedes-Benz said it expects annual group sales to be "significantly below" 2024 levels for both cars and vans, factoring in the impact of the tariffs into account.

For Porsche, the cost burden from tariffs on car imports to the United States has only exacerbated existing problems and the difficulties of a costly restructuring, while it faces weakness in its key market, China, and a slow transition to electric vehicles.

There is no relief for the automotive sector, so crucial to Germany’s economic recovery.

Mercedes-Benz slashes all forecasts in the face of tariffs

The German luxury carmaker said it expects a profit margin of 4% to 6% for its automotive business this year.

In February, before the US tariff changes, the company had forecast a profit margin for its auto division of 6% to 8% this year, following a 30% drop in net income in 2024 and a 40% sharp contraction in its automotive segment.

Excluding the tariffs, the unit’s margin outlook would have come in at the lower end of its initial forecast, it said. Mercedes-Benz shares fell 1.5% in early trading in Frankfurt.

The brand has halved its expectations due to the impact of the tariffs on the margin of its automotive business. In summary, the tariff effect would translate into 362 million euros ($418 million) on the division’s adjusted EBIT (Earnings Before Interest and Taxes) in 2025.

Meanwhile, the quarterly results signal major concerns. The company’s adjusted operating profit in the second quarter more than halved, standing at 1.99 billion euros ($2.30 billion). The impact of the tariffs, cost-efficiency initiatives, and a €750 million effect from the sale of a plant and restructuring in Argentina further reduced the reported EBIT (operating profit), to 1.27 billion euros, the company said in a statement. Its revenue declined 9% to €33.15 billion due to lower sales of cars and vans and tariffs.

The outlook remains highly uncertain. Mercedes is among the largest brands affected by the US-EU trade deal, as it imports a larger share of cars from Europe to the US than Mexico or Canada, Morningstar analysts wrote in a note.

Porsche amid the tariff impact, recovery in the balance?

Porsche, the luxury brand of Volkswagen, cut its full-year margin target on Wednesday following the EU trade deal with US President Donald Trump and reported a negative impact of €400 million from import duties in the first half of the year.

Considering the recently agreed 15% tariff starting August 1, the German automaker expects total sales this year between 37 and 38 billion euros, in line with previous forecasts, and a return on sales between 5 and 7%, down from the previously expected range of 6.5 to 8.5%.

Group financials released last week revealed that Porsche’s operating profit declined by 91% year-over-year in the second quarter, falling to 154 million euros. Reflecting the ongoing crisis, Porsche also announced an additional 1,900 job cuts over the next four years in February.

Original article published on Money.it Italy 2025-07-30 11:24:04. Original title: La tempesta dei dazi si abbatte su Mercedes e Porsche

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