Germany’s premier luxury automotive manufacturers are grappling with a difficult international sales landscape, particularly in China, prompting them to implement cost-cutting measures to stabilize their profits.

Mercedes-Benz has reported a staggering 53.8 percent decrease in profit, totaling €1.72 billion for the third quarter, leading the company to reduce its full-year profit margin expectations. Sales in the Chinese market dropped by 17 percent, while German sales experienced a decline of 25 percent.

The automaker indicated that group sales decreased by 6.7 percent year-over-year, from €37 billion to €34.53 billion, with their battery electric vehicle sales also suffering a significant setback, falling nearly one-third to 42,544 units.

The crucial profitability metric for the company, its adjusted return on sales, fell to 4.7 percent in the third quarter, which is significantly below its minimum target of 8 percent and represents the lowest figure since its separation from the truck division in late 2021.

Harald Wilhelm, the chief financial officer at Mercedes-Benz, commented that the results for the third quarter “do not meet our ambitions” and emphasized that the company will intensify efforts to enhance efficiency and reduce costs throughout its operations.

Looking ahead, the company stated that fourth-quarter sales are expected to be similar to those in the third quarter. For the full year, anticipated sales are projected to be slightly lower than those in 2023, with battery electric vehicles expected to constitute around 18 to 19 percent of total sales.

In a separate statement, Porsche, which had already lowered its annual forecasts in July, announced it is considering cost cuts and a reassessment of its vehicle lineup due to a significant drop in sales of its sports cars in China, which led to a substantial profit decline.

Porsche’s deliveries in China during the third quarter reached their lowest level in ten years, which resulted in a 27 percent drop in operating profit for the first nine months of 2024, falling to €4.04 billion compared to the same period last year. Revenue also saw a weakening, declining by 5 percent to €28.6 billion in the third quarter.