Mercedes Production Forecast 2026 Points to a Slow Road Back

The Mercedes production forecast for 2026 calls for another year of contraction before a tentative recovery begins, and the numbers behind that outlook reveal a company in a deeper restructuring than the headline decline suggests. Automotive World projects output will fall a further 11% in 2026 to slightly more than 1.6 million units, following a 2025 in which car production already dropped 8.5% to 1.8 million units.

The 2026 trough, if Automotive World’s forecast holds, would set the floor from which a partial recovery runs through 2030. But the recovery is modest by design: average output for 2027-2030 is expected to remain 7.7% below pre-2025 levels. That is not a rebound; it is a structurally lower baseline.

What the Mercedes Production Forecast for 2026 Actually Signals

The primary drag is China, where market conditions for non-domestic OEMs have remained persistently difficult. Automotive World’s base case assumes that recent and imminent product launches there are enough to stabilize the decline, but the forecast explicitly flags the risk that even limited improvement could prove too optimistic.

Mercedes-Benz is simultaneously shrinking its global footprint in specific ways. According to the Mercedes-Benz Group AG 2025 Annual Report, assembly at the COMPAS Joint Venture plant in Aguascalientes, Mexico will end in 2026, removing a production node at the same moment volume is already under pressure. The company is adjusting global production capacity to around 2.2 million units by 2028, with German capacity set at 900,000 units and the Kecskemét, Hungary facility able to produce up to 400,000 vehicles.

That capacity math matters. At a 1.6 million unit trough in 2026, Mercedes would be running its adjusted 2028 capacity base at roughly 73% utilization before the recovery even begins, assuming the 2.2 million target reflects the intended structural ceiling.

Hungary and Alabama Carry the Recovery Case

Automotive World singles out the Kecskemét and Tuscaloosa plants as the main engines of the 2027-2030 improvement. The company’s own disclosures support that framing. The Kecskemét plant is expanding to produce models on the new MMA (Mercedes Modular Architecture) platform, with battery supply from an in-house facility and drive units from its Sebes plant in Romania. The facility employs more than 5,000 people and is positioned as a multi-model hub for the next product generation.

In Alabama, Reuters reports that Mercedes plans to begin producing a new vehicle at its Tuscaloosa plant in 2027, which aligns precisely with the forecast’s recovery inflection point. The US market is the one bright spot in Mercedes’ 2025 sales picture: Mercedes-Benz USA reported 303,200 passenger car retail sales for 2025, a 1% increase over 2024, with the Alabama-built GLE posting 14% year-over-year growth and the GLC up 20%.

Those US retail gains did not prevent the group-level financial squeeze. According to the full-year results disclosed via Nasdaq, Mercedes-Benz Group revenues reached €132.2 billion in 2025, with adjusted EBIT of €8.2 billion after cost savings of more than €3.5 billion. The adjusted Return on Sales for Mercedes-Benz Cars was 5.0%, a thin margin for a brand that has built its premium positioning around pricing power.

The Vans division tells a similar story of volume and margin compression. The 2025 Annual Report records van production down 10.6% to 353,710 units, while the division’s adjusted EBIT fell to €1.75 billion from €2.8 billion in 2024, with adjusted Return on Sales dropping to 10.2% from 14.6%. One partial offset: electric van retail sales rose 46% in 2025, bringing the global eVan share to 8% and the European share to 11%.

Mercedes abandoned its original all-electric production timeline in favor of multi-fuel flexibility across its main plants, letting it sustain internal combustion engine output while EV demand finds its level. That pivot buys time, but it does not resolve the China problem, which is the variable the entire forecast hinges on.

The bull case rests on new product launches landing well enough in China to put a floor under volume there, and on the MMA platform generating enough fresh demand in Europe and the US to lift Kecskemét and Alabama utilization through 2030. The bear case is straightforward: if China deteriorates faster than the base case assumes, average output for 2027-2030 could undershoot the already-subdued 7.7%-below-pre-2025 target. With the COMPAS plant closing and capacity being deliberately trimmed, Mercedes has less buffer to absorb a second miss than it did entering 2025.