Mercedes’ net profit plunged almost 43% in the first three months of the year to reach €1.73 billion (US$1.93 billion), the group said.

Finance chief Harald Wilhelm said Mercedes was nevertheless in a strong position thanks to what he said was a strong position in profitable, top-end vehicles.

“This, combined with a healthy balance sheet provides a solid foundation to navigate our company through a period of geopolitical uncertainties,” he said.

Earnings before interest and tax also fell sharply to reach €2.29 billion, about 15% below analyst expectations in a poll by financial data firm FactSet.

Like other European carmakers, Mercedes-Benz has struggled with fierce competition in key market China, where local competitors such as BYD turn out electric cars that cater to local tastes at lower prices.

Though revenue worldwide fell 7.4%, it fell almost 25% in China.

In the US, which made up almost a quarter of Mercedes’ Q1 revenue, it fell 4.4%.

The carmaker meanwhile said that it would have to withdraw its outlook for the year since “volatility with regard to tariff policies” meant business development could not be reliably forecast.

US President Donald Trump has threatened and imposed a variety of tariffs designed to bring manufacturing back to his home country, including a levy of 25% on car imports.

“However, assuming all of the currently implemented and the announced tariffs become effective and remain in place until the end of the year, material impacts are expected,” Mercedes added.