Mercedes is not going through a storm but it is already facing strong storms. The slowdown in European registrations, which is accompanied by the drop in sales of electric models, but also the arrival of maturity of Chinese manufacturers in their domestic market require important adjustments.
The most spectacular is the decision to lower – for the second time this year – its annual profitability target. Mercedes only foresees an operating margin of 7.5% to 8% for 2024, compared to 10% to 11% previously, a target already reduced after the poor accounts of the second quarter. According to its managers, the operating result will be “significantly lower” to the 19.7 billion euros released in 2023.
“Everyone has overestimated the participation of electricity in sales, which, we thought, should have reached 25% today when it barely exceeds 10%, but it is not about giving up on achieving zero emissions »affirms World Ola Källenius, the Swedish-German boss from the Stuttgart manufacturer. He is delighted “the arrival of an unusually high number of new models into the range between 2025 and 2028.”
doet offensive, described as “ massive ”, will not only give pride of place to battery-powered vehicles. The German brand, which postponed its transition to fully electric from 2030 to 2035, will grant additional respite to some of its models equipped with a thermal engine. Thus, the emblematic S-Class saloon, which will be deeply redesigned in 2026, promises to be renewed in 2028 with an electric version and another, which will retain a powerful gasoline engine.
Difference with Chinese competition
Mercedes, which has lost ground since the beginning of the year in Europe with a drop in registrations of 1.3%, is especially facing the new situation in the Chinese market, which absorbs 36% of its production and represents its main global outlet. . During the third quarter, the star firm saw its sales fall by 13%, a result barely less unfavorable than that of its German rivals. “The number one problem is the general situation of the Chinese economy, which is not going well”assures Källenius, convinced that the brand “it is particularly resistant” despite the headwinds.
This observation ignores the increasingly obvious gap between German brands and Chinese competition. When the internal combustion engine was the gold standard for wealthy Chinese buyers, Mercedes, BMW, Porsche and Audi embodied the alpha and omega of automotive luxury. They did not perceive in time the advances of local manufacturers, with whom they had created joint ventures, particularly in certain digital specialties that, for Europeans, were largely unknown land.
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