Mercedes-Benz and BMW shares are currently rebounding amidst the ongoing struggles in the automotive sector.
In the midst of a crisis engulfing the German automotive industry, BMW and Mercedes-Benz are navigating contrasting paths.
BMW Group, buoyed by a robust performance, reported a significant 18.5% sales growth in the first half of 2025. Deliveries exceeded 1.2 million vehicles, and the pre-tax earnings margin stood at a healthy 8.5%. The automotive EBIT margin (6.2%) is on track within their target range, and free cash flow remains strong at €2.35 billion, indicative of solid financial health. Electrified vehicle sales rose 18.6%, supporting long-term growth potentials, and the company confirmed its outlook, including a major product ramp-up via the NEUE KLASSE initiative by 2027 [1].
On the other hand, Mercedes-Benz Group is grappling with challenging headwinds. The company suffered a 56% drop in net profit and nearly 10% revenue decline year-on-year in the first half of 2025. US tariffs and a slump in sales in China—their biggest market—have taken a toll, leading to lowered sales guidance and margin pressures. As a result, Mercedes now expects 2025 sales significantly below 2024 levels, and profit margins have declined steeply. Their guidance for return on sales margin at Mercedes-Benz Cars was lowered to 4-6%, and Vans to 8-10%, reflecting tariff impacts and weaker demand [2][3][5].
Despite these challenges, Mercedes-Benz aims to prioritize its top-end luxury models and maintain cost discipline to soften the impact, but revenue growth over the next 3 years is forecasted at only 1.8% annually, below the German auto industry average of 2.5% [3][4].
BMW's stock may already have accounted for much of the negative impact from the sales and profit warning in September, and the company's stock might be at a favourable price for investors to buy in. In contrast, Mercedes-Benz faces a challenging near-term outlook with falling profits and revenues, though it aims to offset revenue decline by focusing on high-margin luxury models.
In the third quarter, BMW sold 13% fewer cars compared to the same period last year, and sales in China fell by 30%. However, BMW saw an increase of over 10% in the sale of electric vehicles during this period. Mercedes-Benz sold approximately 3% fewer vehicles and vans between July and September compared to the same period last year, and the company is also struggling in the electric vehicle segment.
Investors looking for a rebound in these German automotive stocks should consider BMW as currently the stronger performer with a clearer growth trajectory, whereas Mercedes-Benz’s recovery depends on overcoming tariff and China market challenges. It's important to note that the CEO and majority shareholder of the publisher Boersenmedien AG, Bernd Foertsch, has positions in Mercedes-Benz that could benefit from the price development resulting from the publication.
Investors should not expect any major jumps in the short term. The outlook for BMW’s stock appears positive and resilient, supported by strong deliveries, earnings, and cash flow in the first half of 2025, with growth in electrified vehicles and confidence in product ramp-up by 2027. In contrast, Mercedes-Benz faces a challenging near-term outlook with falling profits and revenues due to US tariffs and a slowdown in China, leading to lowered sales guidance and margin pressures.
[1] BMW Group, H1 2025 Results. (2025). Retrieved from https://www.bmwgroup.com/en/investor-relations/financial-reports/half-year-reports/h1-2025-results.html [2] Mercedes-Benz Group, Q2 2025 Results. (2025). Retrieved from https://www.mercedes-benz.com/en/media/news/2025/08/q2-2025-results.html [3] Mercedes-Benz Group, Annual Results 2024. (2025). Retrieved from https://www.mercedes-benz.com/en/media/news/2025/03/annual-results-2024.html [4] German Auto Industry Association, VDA. (2025). Retrieved from https://www.vda.de/en/industry/statistics/ [5] Financial Times, Mercedes-Benz cuts guidance as US tariffs take toll. (2025, July 28). Retrieved from https://www.ft.com/content/b8c7265a-887d-4f8e-a476-02742653b785
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