Mercedes-Benz Pushes AI and Cost Cuts as Shares Hover Near 52-Week Low Ahead of Q2 Results

Mercedes-Benz is turning to artificial intelligence and a fresh round of cost discipline to counter mounting headwinds in Europe and China, as its stock trades just a whisker above a 52-week low. The automaker, which marked a century since the Daimler-Benz merger earlier this month, has seen little cause for celebration on the market: shares closed at €44.59 on Thursday, perilously close to the recent trough of €43.99 and down over 27% since the start of the year.

The digitalization push is accelerating. The company aims to have 70% of its workforce using artificial intelligence tools on a daily basis by the end of 2026 — up from just 30% 18 months ago. To that end, it is rolling out the n8n automation platform globally, allowing employees across production, sales, and HR to embed AI-driven workflows directly into their operations. An internal hackathon with more than 1,500 participants has already generated concrete applications that are moving into deployment. Management expects the initiative to deliver measurable efficiency gains.

The urgency is underscored by deteriorating margins. In the first quarter, the adjusted return on sales in Mercedes-Benz Cars slipped to 4.1%, at the lower end of the full-year target range. The squeeze is most acute in China, where fierce competition and subdued demand have forced heavy discounting. Growth in Europe and the US only partially offset the drag. Meanwhile, the European market itself is proving challenging: overall new car registrations rose 3.6% in May to 1.15 million vehicles, but Mercedes-Benz managed a meagre 0.7% gain in the EU. Battery-electric vehicle registrations across the region surged nearly 39%, yet demand for the Stuttgart-based group’s electric models lagged.

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To fight back, CEO Ola Källenius is doubling down on the luxury segment. A facelifted S-Class is due in 2026 to defend the flagship’s position. More immediately, the company has started series production of its all-electric luxury van, the VLE, at its plant in Vitoria, Spain. Based on an 800-volt architecture, the new model promises a range of over 700 kilometres. The entry-level version will reach dealers in the first quarter of 2027, followed by a more powerful all-wheel-drive variant. At the same time, Mercedes is pumping investment into research and development in China, focusing on AI-assisted driving systems to fend off local software rivals.

The market remains sceptical. The stock’s relative strength index stands at 32.9, signalling a nearly oversold condition, but the absence of upward momentum is stark. The 200-day moving average at €55.09 now lies more than 19% above the current price — a clear indicator of a deeply entrenched downtrend. A decisive break below the €44 support level could open the door to new lows.

On the cost front, management is preparing talks with employee representatives over further savings. The combination of automation and tighter spending is intended to lift the operating result this year, even as the company targets group revenue roughly in line with 2025. Over the medium term, Mercedes plans to sell around two million vehicles annually, a goal that relies on the margin improvements promised by the ongoing restructuring.

The next major test comes on July 28, when Mercedes-Benz reports second-quarter earnings. By then, investors will be looking for concrete evidence that the luxury strategy and cost measures are starting to feed through to the bottom line — and that the stock’s slide has a floor.

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