Mercedes' investment in electric cars is now hurting the brand, which in the third quarter of 2024 can record an operating result that is 53 percent less than a year ago.
In its latest quarterly report, Mercedes presented a profit of 1.7 billion euros, which corresponds to a decrease of 53 percent compared to the same period last year.
This development reflects a markedly lower operating profit for the company, which Mercedes primarily attributes to increased competition in Asia and a general slowdown in the Chinese car market.
In addition, upcoming model renewals, especially the updated G-Class, which is expected to be launched next quarter, also affect the company's results.
In the quarter, around 503,000 cars were sold, which represents a decrease of approximately one percent compared to the third quarter last year.
Looking over the whole year, sales have fallen by 4.3 percent compared to the same period in 2023. However, despite the drop in sales, Mercedes has reported a modest increase in cash flow to 2.39 billion euros, which is two percent higher than last year.
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Operating profit for Mercedes-Benz Cars was reduced by almost 64 percent and revenue fell by seven percent to 34.5 billion euros compared to the same quarter in 2023.
In light of this development, Mercedes has adjusted its expectations for the profit margin. The management points out that the challenges on the Chinese market have contributed to the lower results.
According to Reuters, Mercedes' managing director, Ola Källenius, noted that the brand i.a. is affected by the fact that Chinese consumers and motorists in particular are holding on to their money.
Something that affects the sale of luxury cars, such as the ones Mercedes has in the expensive part of the program. According to Källenius, this wait-and-see attitude towards larger purchases is due to economic uncertainty and a property crisis, which affects consumers' desire to buy in large quantities.
In summary, Mercedes faces both internal and external challenges that put pressure on the company's operating results and profits at a time of fierce global competition and economic turmoil in some markets for several car brands.
Mercedes is not the only car brand to suffer. So does Volkswagen. In fact, the German's financial director believes that the brand has two or three years to reverse the trend, if the group is not to succumb to a debt of 3,200 billion kroner. Read more about it here .
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