Mercedes Buys Back 7,391,990 Shares and Reopens Voluntary Redundancy Program in Germany
Key Facts
Mercedes-Benz confirmed it had bought back 7,391,990 shares from the launch of its program on September 1 through the end of October, for 314,244,670.63 euros. At the same time, the company said it would reopen its voluntary redundancy program for indirect roles in Germany from December 2026, as part of stepped-up productivity measures with a particular focus on its German sites. The moves come as the group cut its forecast for the adjusted return on sales in its cars division and reported a sharp decline in free cash flow at its industrial business in the third quarter. Mercedes did not say the share buyback was intended to support its share price or valuation. The program runs until April 6, 2027, with a cap of 58 million shares and a total value of up to 1 billion euros.
Mercedes cut its forecast for the adjusted return on sales in its cars division for fiscal 2026 to a range of 2%–3%, from 3%–5%. It attributed the update mainly to a difficult market environment in China, higher raw material costs and product life-cycle measures in the fourth quarter. By contrast, the company raised its forecast for the division’s adjusted cash conversion rate to 1.2–1.4, from its previous range of 1.0–1.2. It said foreign exchange headwinds and intensifying competition in China weighed on results, alongside a lower contribution from the Chinese market and higher spending on model launch campaigns and product life-cycle measures. The margin cut puts the outlook in the context of the commercial and cost pressures cited by the company, as it seeks to reduce spending and improve productivity at its German sites.
Free cash flow at the industrial business was 172 million euros in the third quarter, compared with 1,367 million euros in the same period a year earlier. The company said the build-up of working capital contributed to the decline, particularly inventory of new cars expected to be delivered in the following months. At group level, adjusted operating profit was 1.78 billion euros, down 15% from 2.10 billion euros a year earlier, despite reported operating profit rising to 1.773 billion euros and net profit reaching 1.518 billion euros. Revenue totaled 30.698 billion euros for the quarter. Mercedes also expects industrial free cash flow in 2026 to be significantly below the 2025 level of 5.4 billion euros, after previously guiding for only a slight decline from that level.
Mercedes car sales fell to 407,232 in the third quarter from 441,453 in the corresponding period of 2025, a year-on-year decline of 7.8%. The division’s adjusted return on sales dropped to 2.5% from 4.8% a year earlier. In China, sales fell 31% to 86,800 cars compared with the same period a year earlier, amid a tougher market environment and intensifying competition, Reuters reported. By contrast, fully electric car sales reached a quarterly record, rising 61% year on year and 29% from the second quarter, taking their share of global sales to 16.8%. Chief Executive Ola Källenius said cost discipline and contributions from the truck and financial services divisions were helping the company withstand headwinds, while acknowledging that market conditions had become more difficult, particularly in China.
Mercedes said fixed costs had fallen by about 25% since 2019 and that it had intensified global productivity measures since June 2026, with a particular focus on its German sites. The renewed voluntary redundancy program for indirect roles is part of those measures, with offers set to begin in December. The group reported third-quarter results on October 28, 2026, while available share data showed MBGYY closing at $11.43 on November 2. Germany’s Federal Statistical Office is scheduled to release manufacturing data, including new orders and revenue, on November 5. Mercedes says order books for key models in Europe extend into 2027, pointing to the demand it expects for its new electric lineup.