Mercedes-Benz 2Q26 preview: trimming China profitability assumptions, while Cars margin remains within guidance

Overview

This report is Goldman Sachs’ preview of Mercedes-Benz Group AG’s 2Q26 earnings. It updates forecasts after the company released 2Q wholesale volumes and held a public pre-close call: sales assumptions for the United States and Europe were raised, but China sales and BBAC JV profitability assumptions were lowered. Goldman Sachs believes 2Q Cars margins still align with full-year guidance, and group-adjusted EPS could be above consensus, but China sales, pricing, and dealer support remain the primary drag on profitability.

Core views

The core view is that Mercedes’ new products and electrified-product order performance remain strong and Europe and U.S. sales are better than Goldman’s prior expectations. However, pressure in China has increased materially, resulting in reduced profit assumptions. Goldman Sachs maintained the Buy rating, arguing valuation remains attractive, while share repurchases and value from Daimler Truck ownership support the target price. In the near term, however, earnings may be impacted by non-cash impairments and other accounting noise.

Analysis framework

The report evaluates valuation upside by combining Mercedes’ 2Q26 sales disclosure, pre-close management dialogue, segment margin guidance, consensus comparison, profit forecast revisions, relative valuation, and NPV of the Daimler Truck stake. The valuation uses a blended framework: one part is based on a 50/50 blend of FY27/28E EPS and a 7.5x target P/E, and the other part is the NPV contribution from Mercedes’ Daimler Truck stake.

Methodology notes

• Valuation methodshybrid_p_e_and_investment_stake_valuation

  Hybrid valuation with P/E and Daimler Truck stake

  The target price is composed of two parts: a 50/50 FY27/FY28E EPS blend valued at a 7.5x target P/E resulting in €55 per share, plus the per-share NPV of the Daimler Truck stake of €10, totaling a 12-month target price of €65.

• factor_profileGS Factor Profile

  Growth, financial returns, valuation multiples, and composite factor comparisons

  Goldman’s factor profile compares growth, financial returns, valuation multiples, and composite percentile position to position the stock relative to the market and peers.

• event_analysisearnings_preview

  2Q26 earnings preview versus consensus

  Based on the company’s 2Q sales and pre-close management inputs, the report compares Goldman forecasts with Visible Alpha consensus and updates the 2Q and FY26 profit assumptions.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Mercedes-Benz Group AG (MBGN.DE)

  Report subject and recommended name

  Strengths

  Sales assumptions in Europe and the United States were raised, new products CLA, GLB, and GLC are showing strong momentum, BEV order flow is robust, and repurchase capacity is strong.

  Weaknesses

  China sales and pricing are under pressure, BBAC JV profitability assumptions were reduced, and top-end vehicle mix is affected by product refreshes and supplier timing.

  Comparison

  Goldman’s 2Q group-adjusted EPS outlook is above consensus, while Cars adjusted EBIT and margin are slightly below consensus.

  Risks

  Further deterioration in China, non-cash impairments, a drift from luxury strategy, insufficient cost-savings delivery, and lower-than-expected DTG stake monetization.

• Daimler Truck stake

  A component of target price and potential repurchase funding source

  Strengths

  Goldman includes the Daimler Truck stake NPV of €10 per share in the target price and assumes orderly monetization over the next five years, with proceeds used for Mercedes share repurchases.

  Weaknesses

  The timing and price of monetization are sensitive to market conditions.

  Comparison

  Compared with a pure P/E valuation approach, this ownership valuation allows the target price to better reflect the value of Mercedes’ residual investment asset.

  Risks

  If monetization of the DTG stake is slower than expected or achieved at lower prices, it would reduce distributable cash and repurchase capacity.

• China business and BBAC JV

  Main source of profit revisions

  Strengths

  An entry-level electric GLC was launched in China at RMB 299k, and management said booking and conversion were relatively strong.

  Weaknesses

  China sales and pricing pressure intensified, 2Q profitability worsened materially, and additional dealer support may be required.

  Comparison

  Goldman lowered China sales assumptions from -14% year-on-year to -30% year-on-year and cut FY26 BBAC JV profitability assumptions from 6% to 4%.

  Risks

  If China pressure persists, it could lead to further profit downgrades, dealer incentives, and potential impairment of equity-accounted interests.

Key data

• 12-month target price€65.00Lowered from €66.
• Current price€45.11Price disclosed on the report cover page.
• Implied upside44.1%Based on target versus current price.
• 2Q26 Group adjusted EPS estimate€1.43Goldman estimate, above consensus of €1.29.
• 2Q26 Cars adjusted EBIT and margin€778mn; 3.4%Consensus is €816mn, 3.5%.
• FY26 Cars adjusted EBIT margin estimate4.0%Goldman estimate, above consensus 3.7%, and inside the full-year guidance range of 3%-5%.
• 2Q Group sales418kDown 8% year-on-year, mainly hit by China weakness.
• Global BEV sales growth+51% yoyEuropean BEV sales are up 87% year-on-year, and European BEV share is 26%.
• FY26 share buyback estimate€3.1bnGoldman estimate, above consensus €2.3bn.
• Market cap and enterprise valueMarket cap €43.4bn / $49.5bn; Enterprise value €66.0bn / $75.3bnKey figures from the report cover page.

Impact & implications

For investment implications, the report highlights that near-term valuation recovery depends on whether China pressure eases, whether 2Q margins stay within guidance, and whether buybacks can continue to provide capital return support. Although the target price was reduced, the Buy rating and 44.1% implied upside show Goldman Sachs still sees the risk-reward setup as tilted positive; however, softer China volume and pricing, potential non-cash impairments, and the pace of DTG stake monetization could weigh on market confidence.

Risks

• Luxury strategy drift or reduced strategic focus.
• Key luxury market slowdowns or constraints.
• Cost savings not being delivered.
• Capex not coming down as expected.
• Further deterioration in China sales, pricing, and dealer profitability.
• Daimler Truck stake monetization slower than expected or at lower prices, affecting cash returns and buyback capacity.
• Book value adjustments on investments leading to non-cash impairments.

What to watch

• Mercedes’ official 2Q26 results on July 28.
• Whether 2Q Cars adjusted EBIT margin remains within the full-year guidance range of 3%-5%.
• Trends in China sales, pricing, dealer support, and BBAC JV profitability.
• Order conversion for electrified CLA, GLB, GLC, and the China electric GLC.
• The size and execution pace of the next buyback.
• Whether there are opportunities for partial monetization of Daimler Truck shares.
• Whether potential non-cash impairments affect reported profits.