Automotive News Europe — 2023-10-26
Automotive Industry
Mercedes-Benz is seeing lower than expected consumer adoption rates for electric vehicles, CFO Harald Wilhelm said on Thursday, describing the EV market as a "pretty brutal space."
The company remained committed to its EV targets but could benefit from its combustion engine portfolio if margins on EVs remained lower than previously assumed, he said.
"With some traditional players selling BEV vehicles below the level of ICE (internal combustion engine cars) ... this is a pretty brutal space," Wilhelm said. "I can hardly imagine the current status quo is fully sustainable for everybody."
Wilhelm's comments were made as part of Mercedes' third quarter earnings reporting.
The luxury carmaker on Thursday reported a 12.4% adjusted return on sales in its cars division in the third quarter. It expects to be on the lower end of a 12 to 14% forecast for the year because of price competition, inflation, high interest rates, geopolitical uncertainty and supply chain issues.
The automaker expects to maintain its sales rate next quarter.
Earnings before interest and taxes (EBIT) across the Mercedes-Benz Group fell 6.8% to €4.8 bn ($5.1 bn) while its vans earnings jumped 44% to €715 m with an adjusted return on sales of 15%.
Group revenue was down 1.4% at €37.2bn.
Mercedes described the market environment as "subdued" and "marked by intense price competition, particularly in the electric vehicle segment."
Automakers from Ford to Tesla have been slashing prices throughout the year in markets from the United States to China to stoke demand, particularly in the EV market, but Mercedes has broadly resisted following suit as it focuses on boosting margins over volume sales.
But higher inflation, a €329 m headwind from foreign exchange, and supply chain-related costs dampened third-quarter earnings, the company said, echoing Porsche which warned in its Q3 results on Tuesday that the luxury sector was not immune to macroeconomic woes.
Mercedes earlier this month reported a drop in overall third-quarter sales of 4%, with top-end sales down 11%, partly caused by model changeovers and a shortage in 48-volt systems supplied by Robert Bosch.
Car revenue dipped 3.8% due to the fall in deliveries but the average selling price remained stable, the company said.
Looking ahead, it expects the rate of sales from the first three quarters to remain at around the same pace in the fourth quarter, and did not adjust its full-year sales target of flat growth.