FILE PHOTO: Mercedes-Benz logo is seen in this illustration taken July 28, 2025. REUTERS/Dado Ruvic/Illustration/File Photo

By Christoph Steitz and Christine Uyanik

MUNICH (Reuters) -German luxury automaker Mercedes-Benz is sticking with its premium strategy in its main market China, where a brutal pricing war has cost the group market share as local customers increasingly switch to cheaper domestic models.

CEO Ola Kaellenius, speaking to Reuters ahead of the IAA auto show in Munich, said the new electric GLC SUV - which Mercedes-Benz unveiled on Sunday - would be instrumental in recovering lost ground in the world's largest auto market.

"This is going to hit the nail on the head in terms of what Chinese Mercedes customers are looking for," Kaellenius said.

"And yes, we charge a little bit more. But GLC fans can rest assured ... from a pricing point of view, if you're currently a GLC customer, you will also feel at home with this new electric GLC."

Like Porsche, Mercedes-Benz has been protecting margins at the expense of market share in China, where it suffered a 19% decline in vehicle sales to 140,400 in the second quarter of 2025.

Kaellenius said the company would not change its strategy in China and would maintain its premium approach.

Mercedes-Benz and its European peers are currently awaiting a lowering of U.S. auto import tariffs to 15% from 27.5%, something Washington has pledged as part of the European Union's move to eliminate tariffs on most U.S. goods.

"The European Commission and their trade team are working with the American administration on this," Kaellenius said, adding he hoped that the U.S. administration would soon sign an executive order to get the tariffs down.

Kaellenius did not quantify the financial impact tariffs have had so far on the group's results but said "we're doing what we can to mitigate it".

(Reporting by Christoph Steitz and Christine Uyanik; Additional reporting by Ayhan; Editing by Susan Fenton)