Mercedes-Benz predicted a drop in sales returns for its cars and vans division in 2024, according to a statement published on Thursday.
The company cited extraordinary uncertainty due to conflicts in the Middle East and Russia and tensions between China and the US, highlighting ongoing supply chain issues for critical components as a major risk.
Mercedes-Benz warned that a potential severe economic slowdown could affect the automotive markets. Despite forecasting a 12.6 per cent return on sales for its car division in 2023, the luxury car maker’s profits suffered due to inflation, supply chain costs, and component shortages.
The company anticipates a decrease in adjusted returns for 2024, expecting 10-12 per cent for cars and 12-14 per cent for vans, a drop from the previous year’s 15.1 per cent.
Mercedes-Benz faced challenges throughout 2023; supply issues and inflation will impact sales. Additionally, competitive pricing, especially in the electric vehicle market, puts a strain on profit margins.
Mercedes-Benz, the first among Germany’s top three car manufacturers to announce 2023 results, is projected to lead in return margins, which is partly due to its approach to transferring increased costs to consumers.
The luxury car manufacturer boosted its average price by 2 per cent to 74,200 euros ($80,395.70) and ramped up investment in research and development for future technologies like its MB.OS platform.
However, the group’s earnings before interest and taxes dipped to 19.7 billion euros from 20.5 billion euros the previous year, even with a 2 per cent revenue increase.
