The CFO of the company with such an ambitious goal of “building the most desirable cars in the world” didn’t spend long on euphemisms. “The results of the third quarter do not meet our ambitions,” said Harald Wilhelm in a conference call on Friday, referring to Mercedes’ profits between July and September. After poor sales figures and a profit warning in September, it is now clear how bad things are really going for the Baden-Württemberg company. Mainly because the luxury cars that are so important to Mercedes, such as the S-Class, the G-Class and vehicles from AMG production, are not in demand as hoped, the operating profit fell by 48 percent compared to the previous year to just 2.5 billion Euros.The results of the automotive division even collapsed by 64 percent to 1.2 billion euros, while group sales fell by 6.7 percent to 34.5 billion euros. The return on sales in the third quarter is 4.9 percent. In contrast to previous years, Mercedes is having difficulties in China because the expensive vehicles that Mercedes boss Ola Källenius relies on are not selling: in the doldrums due to the real estate crisis, wealthy potential customers are holding on to their money. Also in the fast-growing and competitive Chinese market Mercedes is under pressure in the electric car market because the company lacks models in the lower and mid-range segments compared to its competitors and the EQS, the electric version of the S-Class in the luxury sector, is falling short of expectations. This is also because customers still prefer to buy a combustion engine when it comes to very expensive cars. “Certain temporary effect” CFO Wilhelm spoke on Friday of “a certain temporary effect”, Mercedes is betting that the numbers will improve in the fourth quarter, not least because of the supportive measures taken by China’s central bank a few days ago. Wilhelm ruled out adjusting the strategy of offering expensive vehicles with high margins. “The strategy is the right one,” said the finance director, “we have to focus even more on quality; we will not respond to the current problems with volume, which are not due to incorrect price positioning.” Mercedes has great hopes for the introduction the electric version of the Mercedes CLA, which is intended to replace the A and B classes, among other things, and is intended to bring the manufacturer higher margins through expensive accessories. More on the topic Wilhelm also announced that he would once again intensify the current cost-cutting efforts. “We will step up a gear when it comes to material costs, variable costs, fixed costs and investments,” said Wilhelm. The company will present information about this in January. Mercedes did not give an outlook for 2025. The forecast for 2024 remains unchanged: The company expects group-wide sales to be slightly below the previous year, while the company expects operating profit (EBIT) and free cash flow to be significantly below the 2023 level.
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