Mercedes-Benz Stock Squeezed by China Sales Crash and US Anti-China Legislation
Published on 06/16/2026 at 18:22 | Redaktion boerse-global.de
The headwinds facing Mercedes-Benz are multiplying. A 27% plunge in Chinese sales during the first quarter of 2026 has already carved a deep hole in the group's profitability, while a proposed US law now threatens to upend its entire American production footprint. Investors are caught between collapsing demand in the luxury giant’s most important market and a regulatory clampdown that could shutter its Alabama plant.
Chinese demand evaporates, margins crumble
Deliveries in China tumbled by roughly 27% year-on-year in the first three months of 2026. That is a brutal blow for a company that relies on the region to absorb high-margin models such as the S-Class and Mercedes-Maybach. Europe and the US posted modest gains, but not nearly enough to offset the shortfall. Group revenue slipped to around €31.6bn, while the automotive division’s margin narrowed to just 4.1% — a far cry from the mid-term targets the management has set.
The profit squeeze runs deeper. Last year, net income nearly halved, and the board has slashed the dividend accordingly. The payout for fiscal 2025 stands at €3.50 per share, which translates into a yield above 7% at current prices — attractive on paper, but also a sign of how much earnings have deteriorated. For the current year, the executive board expects an operating margin of only three to five percent.
A fresh threat from Washington
Just as Mercedes-Benz struggles to revive momentum in China, a new legislative risk emerges on the other side of the Atlantic. The proposed Motor Vehicle Modernization Act of 2026 would bar automakers from selling or producing vehicles in the US if entities from “adversary states” — including China — hold more than 15% of their shares.
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That threshold is a problem for Stuttgart. China’s BAIC Group controls roughly 10% of the shares, and Geely founder Li Shufu holds almost as much. Combined, Chinese interests account for about 20% — well above the 15% limit. The consequences could be severe: the factory in Tuscaloosa County, Alabama, employs more than 10,000 workers and is central to Mercedes-Benz’s North American operations.
Stock stabilises after hitting fresh lows
The share price has been in a tailspin since the start of the year, losing nearly a fifth of its value. It touched a new 52-week low of €46.90 last week before buyers stepped in. By Tuesday, the stock had recovered slightly to €49.49. Still, it trades comfortably below its 200-day moving average, and the relative strength index at 48.5 points to a neutral, directionless market.
The dip has attracted investors hunting for bargains. A rotation into value-oriented industrial stocks has helped, and with a price-to-earnings ratio of just 8.1, Mercedes-Benz looks cheap on the surface. Yet operational reality tells a different story.
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Analyst caution prevails
UBS recently maintained a “neutral” rating with a price target of €57, citing the weak margin trajectory and heavy investment in electrification. The wider analyst community is split: short-term estimates range from €42 to €46, while the consensus sees a longer-term recovery to around €60. Much will depend on whether the new electric CLA and revamped GLC models can stabilise volumes in Europe — and whether the Chinese market shows any sign of turning around in the second half.
The next key test comes in July, when Mercedes-Benz reports second-quarter results. If the automaker cannot convince the market that its Chinese revival plan is gaining traction and that the US legislative risk can be managed, the recent low of €46.90 may not hold for long.
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