Mercedes-Benz is feeling the pressure from the Chinese automotive industry on a global scale. An executive reveals that the historic German marque is embracing AI to help close the technological gap…
Mercedes-Benz Group experienced mixed financial results through the first three quarters of 2026. First-quarter earnings showed resilience with €1,9 billion (approximately R34 billion) EBIT, supported by a 34% surge in European battery-electric vehicle sales despite softening Chinese demand. Second-quarter performance reflected a 7.9% year-on-year drop in car sales to 417 765 units due to a 30% plunge in China.
Adjusted Group EBIT grew to €2.3 billion (approximately R42.3 billion) through cost-cutting measures and van division strength. Third-quarter Group revenue fell 5% year-on-year to €30,7 billion (approximately R565.4 billion), while adjusted Group EBIT declined 15% to €1.78 billion (approximately R32.7 billion) amidst ongoing Chinese market headwinds, prompting reduced full-year profit projections.
Mercedes-Benz embraces AI design to close the technological gap
Speaking to Australia’s Drive, Mercedes-Benz production chief Jörg Burzer emphasised rapid development speeds and intense customer focus as key standout factors alongside cost management and deep integration within the Chinese ecosystem. While acknowledging strong market competition as a benefit for buyers, Burzer expressed confidence in competing directly against rivals both in China and across Europe. To maintain this edge, the automaker leverages advanced artificial intelligence tools to accelerate vehicle engineering, such as deploying automated algorithms to structure virtual crash-test data networks in two to three hours rather than relying on weeks of manual engineering labour.
Mercedes-Benz is preparing a comprehensive product offensive to strengthen its position in the global market, led by next-generation modular architectures designed for hybrid and electric powertrains. Major vehicles scheduled for release include the redesigned CLA, an electric variant of the C-Class sedan, and the fully electric GLB SUV, alongside a dedicated AMG GT electric SUV and a compact G-Class. In China, the German automaker faces intense competition from market leader BYD, alongside aggressive premium-segment rivals such as Nio, Zeekr, and Xiaomi. These domestic Chinese brands continue to capture market share through localised software ecosystems, rapid development cycles, and competitive pricing structures.
Foreign markets struggle to curb China’s market share success
To shield domestic markets from rapid market penetration, key international jurisdictions have instituted aggressive tariff regimes on Chinese-built electric vehicles. The United States implemented duties exceeding 100%, while the European Union introduced countervailing tariffs on top of its standard import fees. Despite these regulatory hurdles, leading Chinese manufacturers maintain global sales expansion through tactical operational shifts.
Automakers absorb initial duty increases using substantial domestic margin buffers while establishing local assembly facilities across Europe, Southeast Asia, and Latin America to bypass direct shipping levies. Brands like BYD accelerate export shipments of plug-in hybrid electric vehicles, which face lower restrictions in select markets. They do this while leveraging vertically integrated battery supply chains to preserve price competitiveness. Chinese auto exports continue expanding into non-tariff regions, including South America and the Middle East, to offset regional margin pressures.
