Mercedes-Benz expects raw material costs to increase further this year, the company's chief financial officer said on Tuesday, adding to headwinds that have already hit the German premium carmaker's earnings.
First Quarter Profit Slump
The warning comes after Mercedes reported a 17% decline in operating profit for the first quarter of 2026. The CFO, Wilhelm, noted that headwinds were already apparent in the January-March period, with rising costs for raw materials such as steel, aluminum, and battery components weighing on margins.
Ongoing Challenges for Automakers
Mercedes is not alone in facing cost pressures. The global automotive industry has been grappling with supply chain disruptions, inflation, and increased demand for electric vehicle materials. The CFO emphasized that the company is working to mitigate the impact through efficiency measures and pricing strategies, but further cost increases are expected in the coming months.
The luxury automaker has been investing heavily in electric vehicles and digital technologies, which require significant raw material inputs. Despite the profit drop, Mercedes remains committed to its long-term strategy, aiming to maintain profitability through premium positioning and cost discipline.
Analysts have noted that the automotive sector's recovery is uneven, with some regions showing stronger demand than others. Mercedes' outlook reflects broader industry trends, as companies navigate volatile commodity markets and shifting consumer preferences.
