Mercedes-Benz, BMW, and Audi Navigate Tariffs and Market Pressures in 2025

Mercedes-Benz, BMW, and Audi report profit declines in 2025 amid tariffs, cost pressures, and market slowdowns, focusing on transformation and electrification strategies.

The half-year financial results of Germany’s leading automakers – Mercedes-Benz, BMW, and Audi – reveal just how challenging 2025 has become for the industry. Rising tariffs, cost pressures, and a slowdown in key markets have hit profits hard. Yet all three brands managed to stay profitable while pushing forward with large-scale transformation programs designed to make them more resilient in a rapidly shifting global economy.

Mercedes-Benz Group reported a 68.5% drop in operating profit (EBIT) in the second quarter, down to €1.3 billion. Even adjusted EBIT came in at just €2 billion – half of last year’s figure. Net profit declined nearly 70%. The hardest hit was the core car division, where sales fell 9% and battery-electric vehicle (BEV) sales dropped 23.6%. Vans performed better, posting a 32% increase in electric van deliveries. To address these challenges, the company launched its most ambitious efficiency program to date – Next Level Performance – aimed at saving €5 billion by 2027 and potentially cutting up to 30,000 jobs through voluntary measures. Mercedes-Benz is also leveraging its global production network and fast-tracking new model launches, including the CLA and AMG GT XX concept. Still, the company has revised its outlook downward, with the cars division now expected to deliver a return on sales of just 4–6%.

BMW Group fared better, keeping its automotive EBIT margin within the target range of 5–7% (5.4% in Q2), despite tariffs shaving around 2 percentage points off profitability. First-half pre-tax earnings reached €5.7 billion, with free cash flow exceeding €2.3 billion. Electric sales rose sharply, with BEVs accounting for 18.3% of total deliveries (111,000 units for the quarter) and combined electrified vehicles making up 26.4%. MINI posted a 33% sales increase, while BMW-branded sales dipped 2.6% due to a 15.5% slump in China. Despite tariff headwinds, BMW expects full-year results to remain stable and continues investing in its Neue Klasse platform, which will accelerate the brand’s EV transition.

Audi saw the steepest profit decline of the three automakers. Operating profit halved to €1.1 billion, and net income dropped 37.5%. Vehicle deliveries decreased 6%, but electric car sales surged 32%, with especially strong growth in France (+196%), the Netherlands (+86%), and Germany (+76%). Undertaking its largest-ever transformation, Audi plans to save over €1 billion annually, refresh its lineup with ten new plug-in hybrids by the end of 2025, and develop software-defined vehicle architectures in collaboration with Rivian. The brand’s innovation push was recognized with the 2025 AutomotiveINNOVATIONS Award for the most innovative premium manufacturer.

While each company is responding differently to tariffs and market turbulence, they share a common strategy: transformation. Mercedes-Benz is accelerating restructuring and launching a record number of new models. BMW relies on its global footprint and tight cost control. Audi bets on technological leadership and an expanded electric lineup. Analysts note that while these measures cushion short-term shocks, 2025 is shaping up to be a stress test for the entire automotive industry as it navigates profitability, electrification, and mounting geopolitical risks.