Mercedes-Benz Stock Hovers Near Breaking Point as Labour Cost-Cuts and China Headwinds Collide

The gap between analyst targets and market reality has rarely been wider for Mercedes-Benz. Bernstein reaffirmed a neutral rating and a 61-euro price target on Friday, but the shares closed at 43.27 euro — a chasm that underlines how deeply the German automaker’s troubles have resonated with investors. The session saw the stock touch a fresh 52-week low of 43.01 euro, extending a sell-off that has erased nearly 30% of the company’s value since January.

The technical picture is equally grim. The equity now trades more than 21% below its 200-day moving average, and the relative strength index has sunk to 29.2, a level that normally signals an oversold condition. Yet a rebound is far from guaranteed: the same index has been flashing oversold readings before, with no automatic turn in sight.

Management has responded with a radical internal restructuring. In an urgent bid to curb structural costs, Mercedes-Benz is deferring a contractual special payment originally scheduled for July 2026 by a full year. The bonus, worth roughly one-fifth of a month’s salary, is just one element of a broader clampdown. The company is also pressing the works council to extend the standard 35-hour work week — without any wage compensation. The message from the boardroom is blunt: Germany’s high labour costs are devouring the profits generated by new models.

Should investors sell immediately? Or is it worth buying Mercedes-Benz?

That dilemma is most visible with the electric CLA. In Europe, order books are robust, stretching deep into the second half of the year. But in China, the carmaker’s most profitable market, registration numbers remain stubbornly low. Competition from local players has become aggressive, and global trade barriers add further friction. The result: a sharp squeeze on margins. In the first quarter, the adjusted return on sales in the passenger car division shrank to 4.1%, at the very bottom of the company’s target range.

Despite the headwinds, the board stands by its full-year guidance issued at the end of April. The group still expects revenue to match last year’s level, and operating profit to come in “clearly above” the 2025 figure. Only free cash flow is forecast to slip moderately. But with the stock price telling a different story, investors are demanding hard proof.

The next reality check arrives on 28 July, when Mercedes-Benz publishes its second-quarter results. A pre-call with analysts is scheduled for 14 July, after the mandatory quiet period that begins this Sunday. By then, the market will want to see whether the cost-cutting measures are enough to stabilise margins — and whether the 30% year-to-date slide can find a floor. The company is counting on more than 40 new models rolling out by 2027 to revive growth. But for now, every fresh low raises the stakes on that July earnings day.