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Mercedes-Benz stock (OTCMKTS: MBGAF) has had a relatively strong year so far, rising by close to 7%, outperforming the S&P 500, which has remained roughly flat year-to-date. Things have actually been pretty tough on the operating front for the company due to declining sales globally and the impact of U.S. tariffs. So what’s happening with Mercedes stock?

Mixed Q1 Results

Mercedes recently posted a mixed set of Q1 2025 results. Revenue stood at 33.2 billion euros ($37.2 billion), down by about 7% compared to last year due to macro headwinds and declining shipments to China and the European Union. While both shipments of passenger cars and vans fell, the company is seeing a higher mix of more premium vehicles, such as Mercedes-AMG models. Operating income came in at 2.55 billion euros ($2.85 billion), down 29% year-over-year.

U.S. Tariff Impact

U.S. tariffs on automotive imports could meaningfully impact Mercedes-Benz. The company recently suspended its financial guidance for the year, citing rising uncertainty from the tariffs. Although President Trump has signed directives aimed at easing tariff pressure on the auto sector, a 25% levy remains in place. This poses a considerable challenge for Mercedes, which imports several popular models into the U.S., potentially making its vehicles more expensive and less competitive. The U.S. has been a profitable market for Mercedes, due to the preference for large, high-margin SUVs and also due to waning interest in EVs, a segment where Mercedes has been struggling. To mitigate tariff exposure, the company confirmed plans to shift production of its popular GLC SUV to the U.S., joining its GLE, GLS, GLE Coupe, and Mercedes-Maybach GLS that are already built there. However, the move is expected only by the end of 2027, leaving Mercedes exposed in the interim. The GLC is Mercedes most imported model, with U.S. sales rising 58% last year to over 64,000 units.

Is Mercedes Stock A Buy?

Despite the better-than-expected earnings, we remain marginally positive on Mercedes stock with a price estimate of about $66 per share, which is about 10% ahead of the market price. Now, although Mercedes stock trades at a relatively reasonable valuation of under 8x projected 2025 earnings, the near-term outlook is tough. However, the earnings per share could be supported by the company’s ongoing share repurchase program. Mercedes recently proposed a new buyback program of up to 5 billion euros to buy back up to 10% of its share capital. The company is also taking steps to make its production footprint more efficient, targeting production cost cuts of 10% by 2027. See our analysis of Mercedes-Benz valuation for more details on what’s driving our price estimate for Mercedes-Benz.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.