Mercedes-Benz Bets Big on Hungary as China Slump and Bleak Industry Outlook Weigh on Shares
Published on 07/16/2026 at 16:07 | Redaktion boerse-global.de
Mercedes-Benz is navigating a sharply divided narrative this July. On one hand, the automaker has fired up production of its new electric C-Class at a massively expanded factory in Kecskemét, Hungary — a €1 billion bet on lower-cost manufacturing and the future of EVs. On the other, its second-quarter China sales cratered by roughly 30%, casting a long shadow over group profitability and keeping the stock mired near its 52-week low.
The contrasting signals were laid out in a pre-close call on Tuesday, where management confirmed its full-year guidance for the passenger car division: an adjusted return on sales of between 3% and 5%. That range — maintained despite the China hit — is being read by analysts as a sign of stability, especially after rival BMW struck a more cautious tone recently. The van segment, meanwhile, is outperforming expectations. Adjusted return on sales there is now anticipated at the upper end of the 8% to 10% corridor. Free cash flow from the industrial business is expected to remain positive in the second quarter, though seasonally it will dip below the first quarter's level. Full half-year results are due in July.
Operationally, Mercedes-Benz is also tidying up its financial structure. As of July 15, four bond series with a combined €3.5 billion in volume were migrated to a new issuer, the Dutch subsidiary Mercedes-Benz International Finance B.V. The largest tranche, €1.5 billion, matures in 2029, with two further €750 million tranches running to 2030. For existing bondholders, nothing changes economically: the parent company remains the irrevocable guarantor. The move is described as a streamlining of international financing.
Group CIO Katrin Lehmann will leave the company on September 1 at her own request. Her IT transformation responsibilities have already been folded into the “People & Enterprise Tech” board unit under Britta Seeger.
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Analyst views diverge sharply on upside potential
Despite the same underlying facts, the sell-side remains split. HSBC reiterated a Buy with a €65 price target, implying nearly 47% upside from Wednesday’s closing price of €46.20. Deutsche Bank Research, which published its own note on July 16, stuck with a Buy and a more ambitious €74 target — far above current levels. Bernstein Research is more cautious, sticking with a Market-Perform rating but nudging its price target up to €61.
The stock itself has done little to excite. On the day of the Deutsche Bank note, it inched down 0.32% to around €46.05. That is still about 8% above its 52-week low of €42.64, hit at the end of June, and the shares have clawed back 5.36% over the past week. But year-to-date, the decline stands at 25.06%.
Hungary expansion: low-cost platform for the electric era
Central to the bullish case is the Kecskemét plant, which has doubled its footprint to 440 hectares and now employs roughly 5,000 workers. Production of the new all-electric C-Class — built on the MB.EA-M platform with an 800-volt architecture, a 94 kWh battery, 330 kW charging capacity, and a WLTP range of up to 762 kilometers — started this week. The site also assembles the GLB and will eventually become the exclusive manufacturer of the compact G-Class. Both bodywork and battery components are produced in-house.
Deutsche Bank analyst Tim Rokossa sees the Hungary push as a strategic pivot toward lower-cost production bases, which he argues should structurally support margins. The investment underscores a broader trend: Mercedes-Benz is progressively moving production of key models to regions with cheaper labor and favorable incentives.
Drone defense and industry headwinds
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Beyond manufacturing, Mercedes-Benz has already moved beyond the exploratory phase in protecting its facilities. At the ILA air show in Stuttgart in June, it signed a letter of intent with Tytan Technologies to develop drone defense systems for its production sites and test vehicles — a sign of rising security concerns around industrial espionage.
Yet the macro environment remains daunting. A study commissioned by the metals industry association Gesamtmetall from the Fraunhofer Institute warns that up to 726,000 automotive jobs in Europe could disappear by 2040, based on 2025 totals of 1.6 million employees and €250 billion in value added. By 2030 alone, 375,000 positions are at risk, and by 2035 roughly 660,000. Meanwhile, the Center of Automotive Management reports that German manufacturers suffered above-average sales declines in the first half of 2026, even as Chinese rivals like BYD continue to expand their European footprint.
On the demand side, there is at least one bright spot: the share of battery-electric new registrations in Germany climbed to 24.8% in the first half of 2026, up from 19.1% a year earlier, according to the Federal Motor Transport Authority. The state of Rhineland-Palatinate leads at about 30%, while Hamburg lags at 16%. For Mercedes-Benz, the new electric C-Class from Hungary is timed to capture exactly this growing segment — but the structural pressure on the entire industry leaves the stock’s recovery far from assured.
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Mercedes-Benz Stock: New Analysis - 16 July
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