Mercedes-Benz has seen its profits halve over the last year in response to high tariffs and falling sales in the Chinese market.
The German automaker's earnings before interest and tax dropped more than 57 per cent to £5billion last year, down from £11.8billion the previous year.
Across 2025, Mercedes-Benz Cars saw sales fall 9.2 per cent to just over 1.8 million, compared to 1.98 million sales in 2024.
It saw a minor 0.3 per cent growth in electrified vehicle sales to 168,700, although battery electric vehicle sales fell 8.8 per cent.
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Finance chief Harald Wilhelm said car sales in China are expected to fall further, following a concerning 19 per cent decline the year before.
Despite the disappointing financial results, Mercedes remains confident that it can win back customers in China with new product launches over the coming years.
Ola Källenius, Chairman of the Board of Management, Mercedes-Benz Group AG, said the company had done an "outstanding job" in 2025.
He praised the work completed to ensure the success of the brand's "biggest-ever product and tech launch programme".
Mercedes-Benz dealt with a number of significant challenges in 2025
| MERCEDES-BENZMr Källenius added: "We debuted class-leading innovations such as the MB.OS operating system, our new point-to-point assisted driving system and unveiled a new level of electric performance with the Concept AMG GT XX.
"Amid a dynamic market environment, our financial results remained within our guidance, thanks to our sharp focus on efficiency, speed, and flexibility."
Mercedes-Benz expects to see a huge jump in operating profit this year following redundancies which cost the company around £1.4billion.
It plans to return to a profit margin of between eight and 10 per cent through its auto division over the coming years.
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Chairman Ola Källenius remains optimistic about Mercedes-Benz in 2026
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The Stuttgart-based company said this would be done through "relentless cost discipline" through job cuts and increasing capacity in certain countries.
Mr Källenius continued, saying: "Now we are all set for 2026: The launch of more than 40 new models over only three years continues at an even higher pace.
"Strong demand for our new CLA, GLC or S-Class proves that our customers are excited about our new models."
He emphasised that the brand was moving forward "with a clear game plan" and a competitive portfolio of products.