Key facts
- Mercedes-Benz reported a 22% rise in Q2 operating profit to €1.5 billion.
- The company cut its full-year car sales forecast, now expecting unit sales to be slightly below the previous year’s level.
- Second-quarter car sales in China declined by 30%.
- Sales of fully electric Mercedes-Benz cars increased by 51% year-on-year, driven by Europe.
- Mercedes-Benz is exploring a partnership with defence company TYTAN.
Mercedes-Benz reported a 22% increase in second-quarter operating profit to €1.5 billion, but lowered its full-year car sales forecast due to significant weakness in the Chinese market and intensifying competition. The company now expects unit sales to be slightly below the previous year’s level, revising its earlier forecast of broadly stable sales and revenue.
Car sales in China declined by 30% in the second quarter, impacting the cars division's earnings. This was partially offset by a 51% year-on-year increase in fully electric Mercedes-Benz car sales, primarily driven by Europe. Revenue fell by 3% to €32.1 billion in the second quarter. The company attributed the decline in its core cars division's earnings to tougher market conditions in China, a less profitable model mix, and costs associated with product updates, with €704 million in accounting charges related to investments in China impacting the division's reported operating profit.
Mercedes-Benz is implementing cost-cutting measures at its German plants and boosting production in Eastern European countries. CEO Ola Kaellenius emphasized the need to reduce costs to remain competitive. The company is also exploring a strategic growth area in security and defence vehicles, potentially partnering with defence company TYTAN.
Other German automakers like Porsche and BMW are also facing pressure in the Chinese market and have revised their forecasts downwards.