2024-07-27 06:21:53
In the second quarter of 2024, Mercedes-Benz’s core business continues to weaken.
One of the biggest challenges: declining sales in the luxury segment, such as the S-Class (starting at €100,000).
However, other divisions are also suffering from declining sales: In its electric cars, Mercedes sold only about a quarter fewer vehicles than last year (45,800).
Mercedes-Benz continues to struggle with difficulties in its core business. In the second quarter of the current year, operating profit fell to €4 billion. By comparison: Just a year earlier, quarterly profits were still at €5 billion.
The reason for the profit decline: sales declines in the automotive division, primarily in the passenger car segment, reports the “Handelsblatt”. There, profits decreased by 28.5 percent compared to the previous year. Already in the second quarter of 2024, Mercedes-Benz sold six percent fewer passenger cars than in the same period a year earlier. Throughout the year, the business in the top product segment, the so-called Top-End Vehicles, has especially deteriorated. This includes the S-Class and the EQS electric model, which start at over €100,000 for the base model.
Positive Van Business Could Offset Declining Earnings
With China, one of the main sales markets for these models has weakened. This has also been felt by Mercedes. It is one of the reasons why sales plummeted by 17 percent. Moreover, according to market research firms, Mercedes-Benz could only deliver 28,100 units of its model series globally from January to June. Additionally, the current generation of the S-Class, which has been on the market since 2020, is increasingly losing its attractiveness, with a planned technical update not expected until 2026.
However, other divisions are also struggling with declining sales: In its electric cars, Mercedes sold only about a quarter fewer vehicles than last year (45,800). Electric vehicles make up less than ten percent of all sold new Mercedes cars.
The outlook is more positive for the van business, where the adjusted profit margin is expected to rise from 14 to 15 percent, according to Mercedes-Benz. This increase could also mitigate the declining earnings in the financial services division Mobility.
Also read
Future Trends for Mercedes-Benz: Navigating Challenges in the Luxury Car Market
As Mercedes-Benz faces significant challenges in its core business, particularly with declining sales in the luxury segment, the company is at a crossroads. The recent report indicates that the S-Class, a monument of luxury and quality, is seeing a notable drop in appeal. Industry experts suggest that without timely technical updates, models like the S-Class could lose customers to competitors who continue to innovate faster.
China, historically a strong market for high-end vehicles, has also shown weakness, contributing to a 17% drop in sales. This trend suggests that Mercedes must adapt its strategies in emerging markets and re-evaluate its approach to cost structures and production cycles. Emphasizing electric vehicles (EVs) will be crucial, even though current sales figures reveal a troubling decline in demand, with EVs constituting less than 10% of overall sales. Increasing investment in EV technology could help regain market share and appeal to a more environmentally conscious consumer base.
Leveraging the Van Segment for Stability
Interestingly, while luxury car sales are struggling, Mercedes-Benz’s van segment is projected to improve, with an expected rise in the operating margin. This unexpected silver lining may help to stabilize overall earnings. The company might consider focusing on commercial vehicles and luxury vans, which could diversify their portfolio and mitigate losses from luxury passenger vehicles. Innovations in this area could attract new customers and reinstate Mercedes as a leader in both luxury and utility markets.
Investment in Technologies and Customer Experience
To thrive in the shifting automotive landscape, Mercedes must also enhance its technological offerings. The anticipated update for the S-Class will not arrive until 2026, but the company should prioritize fast-tracking technologies that resonate with consumers, like advanced driver-assistance systems and integrated connectivity features. Enhancing customer experiences, such as offering personalized services or exclusive ownership benefits, could also prove advantageous in retaining existing customers and attracting new buyers.
Ultimately, the luxury car market is evolving rapidly, and Mercedes-Benz’s ability to adapt to these changes will determine its future success. By focusing on innovation across all segments and maintaining a keen eye on market trends, Mercedes can navigate its current challenges and emerge stronger in a competitive landscape.
#Warum #Mercedes #seine #SKlasse #nicht #mehr #losbekommt