German premium automaker Mercedes-Benz said Wednesday its first-quarter profit fell by almost a fifth as cutthroat competition in China shakes the world's carmakers.

Net profit for January to March came in at 1.43 billion euros ($1.67 billion), down more than 17 percent on the previous year, hit by difficulties in China.

"In China, intense competition and subdued demand continued to weigh on the market," Mercedes said.

The world's largest market, China has become a fierce battleground for carmakers amid a brutal price war and fierce competition from local players such as BYD and Geely.

Mercedes said car sales by volume in China fell 27 percent in the first three months of 2026, even as they grew in Europe and North America.

The firm's China sales were last year already at their lowest level since 2016.

Intense competition in the country, long a steady source of profits for German carmakers, has hurt Mercedes and its rivals.

The 10-brand Volkswagen Group, which includes premium marques such as Audi and Porsche, is planning 50,000 job cuts by the end of the decade.

China's BYD, the world's largest electric carmaker, meanwhile said Tuesday its first-quarter profit had more than halved amid slowing domestic sales.

Restating its commitment to China, Mercedes said it was working with local firms to develop "a new generation of China-fit vehicles", pointing to the China variant of the electric GLC compact SUV launched at the ongoing Auto China exhibition in Beijing.