Mercedes-Benz Group expects demand in China’s premium vehicle market to remain subdued, as wider economic strains continue to affect consumer spending.
As reported by Bloomberg, executives speaking at the Auto China show said the German carmaker is seeing weaker buying sentiment because of the prolonged property slump, elevated youth unemployment and higher fuel costs tied to the Iran conflict.
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These factors have reduced consumers’ willingness to spend on luxury vehicles.
The company’s sales in China dropped 27% year-on-year in the first quarter, a steeper fall than in the final quarter of 2025, although China remains Mercedes-Benz’s biggest market.
Oliver Thöne, the company’s China chief, said: “For the Chinese market, we can see a general hesitancy to buy,” citing weakness in the property sector and rising household savings as job prospects for recent graduates deteriorate.
Chief executive Ola Källenius said new vehicle launches planned for later this year, including an updated S-Class, are expected to help support results.
Mercedes-Benz is also contending with stronger competition from Chinese carmakers during an extended price war that has put pressure on several German manufacturers.
Some European brands, including Volkswagen’s Skoda division, have already said they will exit the Chinese market.
Even as sales volumes decline, Källenius said Mercedes-Benz will stick to pricing discipline while continuing to invest for its longer-term position.
Beyond China, the group said electric vehicle sales in Europe are improving, helped by demand for the electric CLA sedan.
The model is part of a wider plan to introduce about 40 new vehicles over the next few years.
Separately, South Korean battery maker Samsung SDI Company said earlier this month that it had entered into a multi-year agreement with Mercedes-Benz to supply batteries for next-generation electric vehicles.
Samsung SDI said the deal marks its first EV battery supply agreement with the German manufacturer, though it did not reveal the contract’s value.
Under the arrangement, Samsung SDI will provide high-nickel NCM (nickel, cobalt and manganese) batteries for Mercedes-Benz’s next-generation EV models.
