Mercedes profit drops sharply
Supplier bottlenecks and model changeovers hit luxury car sales
German automotive manufacturer Mercedes-Benz said yesterday profit fell significantly in the first quarter as supplier issues hit luxury car sales.
Net profit in the first three months of the year dropped 24.6% compared with the same period in 2023, down to €3 billion (RM15 billion) from €4 billion.
The figure was better than a prediction by analysts surveyed by financial data firm FactSet, who had forecast a figure of €2.8 billion.
Revenues in the first quarter fell by 4.4% to €35.9 billion as a result of the sales hit.
Mercedes said in a statement its performance had been boosted by “lower raw material prices, tight cost control” and a strong performance in its vans division.
Revenues in the utility vehicles segment were up 6% in the first quarter to €4.9 billion.
The increase propelled a 22.4% rise in the division’s operating profit to €933 million – a closely watched measure of underlying performance.
The strength of the van business however failed to offset a difficult quarter for the group’s core car unit.
A first-quarter drop of 7.5% in revenues, which fell to €25.7 billion, was down to “supplier bottlenecks and model changeovers in the top-end segment”, the group said.
Unit sales of cars were down 8% to just under 463,000, Mercedes said.
The drop was matched in battery vehicles with some 47,500 units sold.
The result reflected “solid results in all regions except Asia”, Mercedes said.
Looking ahead, Mercedes kept its outlook unchanged, saying it expected supply issues to ease over the course of the year.
“Sales levels in the first quarter are seen as the trough, with second quarter volumes expected to be better,” the group said.
Overall Mercedes said it expected sales in 2024 to match those in the previous year.
Meanwhile, fellow German auto giant Volkswagen reported yesterday that profits fell sharply at the start of the year as vehicle sales slipped but confirmed its outlook for 2024.
Net profit stood at €3.7 billion from January to March, down more than 20% from a year earlier.
However the figure was higher than €3.3 billion expected by analysts surveyed by financial data firm FactSet.
Sales were €75.5 billion, down slightly from a year earlier, although better than expected.
“Our first quarter results show a slow start to the year,” said Arno Antlitz, chief financial officer of Volkswagen, whose 10 brands range from Porsche to Seat and Skoda.
“We remain confident of achieving our financial targets for 2024,” he said, citing “solid” orders.
He said the launch of some 30 new models as well as previously announced savings programmes will boost VW as the year progresses.
Volkswagen sold 2.1 million vehicles in the first quarter, down 2%t from a year earlier.
Sales rose in Asia-Pacific and South America but slipped in Europe and North America.
An increase in fixed costs also weighed on the carmaker.
But it said orders remained “stable at a high level” and confirmed its outlook for 2024, with sales revenue expected to grow by up to 5%.
Volkswagen is facing a host of challenges, ranging from fierce competition to a costly shift to electric vehicles.