BERLIN (Reuters) -Mercedes-Benz on Wednesday reported lower profitability in its cars business in the first quarter and warned that tariffs could impact its full-year earnings, as trade tensions forced the luxury carmaker to scrap its outlook.

The German luxury carmaker reported a profit margin for its car segment of 7.3%, slipping from 9% in the first quarter of last year.

Group earnings before interest and taxes (EBIT) plunged by 41% year on year to 2.3 billion euros ($2.62 billion) in the first three months of 2025.

"The current volatility with regard to tariff policies, mitigation measures and resulting potential direct and indirect effects, in particular on customer behaviour and demand, is too high to reliably assess the business development for the remainder of the year," the company said in a statement.

The sweeping and erratic tariff regime of President Donald Trump piles pressure on European carmakers already facing a swathe of other challenges, including stiff competition from China and high costs in Europe.

Assuming current trade policies persist, Mercedes expects its margins in the cars and vans units to be "negatively impacted", it said in a statement.

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