Mercedes-Benz's revenue fell short of expectations in the second quarter of 2024. The German luxury carmaker anticipates continued weak demand and has adjusted its margins guidance downward.
ADVERTISEMENTMercedes-Benz AG, the renowned German luxury automaker, reported a decline in revenue for the last quarter and issued a profit guidance that fell short of expectations, as the company anticipates continued weak customer demand for the rest of the year.
Shares of Mercedes-Benz AG dropped more than 2% at the market open in Frankfurt to €61, reaching their lowest level since late January 2024.
Revenue for the second quarter of 2024 stood at €36.7bn, down from €38.2bn in the same period last year and below analyst predictions of €37.2bn. The cars division achieved a 10.2% return on sales during this period.
The cost of sales amounted to €28.9bn, only slightly down from €29.2bn in the second quarter of 2023. Gross profit in relation to revenue significantly declined compared to the previous year.
Net profit for the second quarter of 2024 was €3.1bn, a decrease from €3.6bn in the same quarter of 2023. Basic earnings per share dropped to €2.95 from €3.34 last year but exceeded the expected €2.83.
The carmaker revealed that weaker customer demand became increasingly noticeable as the high order backlogs caused by the pandemic were cleared. The Chinese market contracted slightly, with the premium and luxury segments in China remaining weak.
Dr. Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, highlighted a key issue affecting the German automotive industry. "The most significant factor impacting the German manufacturing sector is the increasing loss of global market share of German car and machinery producers to competitors in China. Unfortunately, this problem is here to stay," he noted.
Product and regional performance
Mercedes-Benz sold 496,700 car units in the second quarter of 2024, a 7% increase compared with the first quarter but a 4% decline compared to the same quarter of the previous year.
Top-end product sales were notably lower than the previous year, primarily due to model changes and a subdued market environment in Asia.
The Core category accounted for 58% of total unit sales in the second quarter of 2024, an 8% increase from the first quarter and a 5% increase from the previous year, primarily driven by the improved availability of the GLC model.
The Entry category represented 28% of the portfolio, with A-Class sales totalling 51,000 units, down from 60,700 in the same period last year.
The share of electrified vehicles reached 18.1% of Mercedes-Benz cars’ total unit sales in the second quarter of 2024, down from 18.6% in the same period last year. This corresponds to about 90,000 units, compared to 95,900 previously. All-electric car sales amounted to 45,843 units, a 25% reduction from the second quarter of 2023, while plug-in hybrid car sales increased by 27% to 44,120 units.
At the ESG conference on 20 March 2024, Mercedes-Benz Group announced its goal to achieve an electrified vehicle share of up to 50% of new vehicle sales by the second half of the decade.
Mercedes-Benz trims outlook on sales
Ola Källenius, Chief Executive Officer of Mercedes-Benz Group AG, stated, “Going forward, we continue to invest in cutting-edge products while fostering our financial resilience. Sales and the model mix are expected to improve in the second half of the year, supported by further market launches of new models, particularly in the Top-End segment.”
Mercedes-Benz now expects an adjusted return on sales in the range of 10% to 11% for the year, down from the previous target range of 10% to 12%. Conversely, the vans division is projected to show a stronger adjusted return on sales of 14% to 15%, up from the previous target of 12% to 14%.
