The German premium carmaker posted earnings before interest and tax (EBIT) of 1.9 billion euros ($2.22 billion) for the first quarter, down 17% from a year earlier but ahead of the average analyst forecast of 1.6 billion euros, according to a Visible Alpha poll.

Revenue for the quarter came in at 31.6 billion euros, slightly below analyst estimates of 31.8 billion euros, reflecting continued pressure on sales volumes in key overseas markets, particularly China, where luxury automakers have faced softer consumer demand and intensifying domestic competition.

Mercedes’ adjusted return on sales for its core passenger car division was 4.1%, compared with 7.3% in the same quarter last year, but remained within the company’s full-year target range of 3% to 5%.German automakers including Mercedes have been contending with a difficult external environment marked by high tariffs, sluggish Chinese demand and a challenging shift toward electric mobility, forcing manufacturers to cut costs while defending profitability.

Chief Executive Ola Kaellenius has responded with broad restructuring measures, including redundancies and tighter cost controls, while accelerating the rollout of new vehicle models aimed at reviving growth and protecting the brand’s premium position in China.Chief Financial Officer Harald Wilhelm said the company remained “on track” to meet its guidance for 2026 group EBIT to come in “significantly above” last year’s 5.8 billion euros.

“Strong demand for our new products and healthy order books position us well for improved momentum in the second half of the year,” Wilhelm said.Mercedes is planning to launch 40 new models between 2025 and 2027, including the all-electric CLA sedan in its entry-level segment and an upgraded S-Class lineup aimed at reinforcing its position in the high-end luxury market.

The company said it would continue strict cost discipline as it works toward a medium-term target of restoring double-digit profitability, with a longer-term margin goal of 8% to 10%.