Mercedes-Benz has revised its annual profit margin forecast for its core car division, now expecting an adjusted return on sales of 10-11% for the year, down from the previous target range of 10-12%. The adjustment comes as the German luxury automaker faces intensified competition, particularly in China, though it anticipates that new models will drive sales growth in the latter half of the year.
In the second quarter, Mercedes-Benz’s cars division achieved a 10.2% return on sales, but its adjusted earnings fell short of analyst expectations. Sales for the first half of the year dropped by 6%, with electric vehicle sales experiencing a significant 17% decline.
The company noted ongoing economic uncertainty but reported improving market sentiment in Europe and solid sales momentum in the US market. However, Mercedes-Benz remains cautious about China, where it expects strong competition in its entry-level and core model segments while aiming to maintain its leading position in the high-end market.
CEO Ola Källenius expressed optimism for the second half of the year, highlighting that new model launches, particularly in the Top-End segment, should bolster sales and improve the model mix.
The automaker is contending with challenges including weak demand for electric vehicles, strong local competition in China, supply chain disruptions, and high interest rates. The group reported a 27.5% drop in adjusted earnings for its car division in the second quarter, slightly more than the 26% decline estimated by LSEG. At the group level, earnings before interest and taxes (EBIT) fell by 19.1% for the quarter, aligning with LSEG’s consensus estimate.
