ISLAMABAD (PEN) : Friday, Mercedes-Benz revised its annual profit margin forecast for its core car division, adjusting expectations downward amid intense competition in China. The German luxury carmaker now anticipates an adjusted return on sales of 10-11% for the year, slightly below its previous estimate of 10-12%.
In the second quarter, Mercedes-Benz’s car division reported a return on sales of 10.2%, though its earnings fell short of analyst predictions. Sales dropped by 6% in the first half of the year, with a notable 17% decrease in electric vehicle sales.
The company acknowledged an uncertain economic outlook but noted positive signs of recovery in Europe and solid demand in the US market. However, Mercedes-Benz expressed caution regarding the Chinese market, where it faces stiff competition, especially in the entry-level and core model segments. The company is focused on maintaining its strong position in the high-end car segment while launching new models to boost sales in the latter half of the year.
CEO Ola Kaellenius emphasized that while challenges persist, including sluggish demand for electric vehicles and ongoing supply issues, the company remains optimistic about improving sales and model mix with new market launches.
Overall, the company reported a significant 27.5% decline in adjusted earnings for its car division in the second quarter, slightly worse than the 26% drop anticipated by analysts. Group-wide, earnings before interest and taxes (EBIT) fell by 19.1%, aligning with market expectations.
The struggle reflects broader challenges faced by German automakers, including stiff local competition in China, supply chain disruptions, and high interest rates.
