Mercedes-Benz Reports Decline in Third-Quarter Sales

Germany's Mercedes Benz Group (ETR:MBGn) has reported a drop in third-quarter sales, impacted by weak economic conditions in China and a subdued market for battery-powered electric vehicles (EVs).

Group-wide sales, which include both passenger cars and vans, fell by 3% year-on-year to 594,600 units during the period, as reported by Mercedes-Benz (OTC:MBGAF) on Thursday. Compared to the previous quarter, this figure decreased by 1%. Notably, battery EV sales slumped by 31% from the previous year, totaling 46,900 vehicles.

> "Softer demand, mainly in Asia, affected overall sales," the company stated.

In China, the world’s largest automotive market, car sales amounted to 170,700, marking a 13% decline. The vans unit of Mercedes-Benz also faced challenges due to a softening environment in the country during the third quarter.

With rivals like Volkswagen (ETR:VOWG_p) and BMW (ETR:BMWG) also lowering annual performance outlooks due to sluggishness in China, Mercedes-Benz adjusted its guidance for the second time in three months in September. The company now expects annual group earnings before interest and taxes to be significantly below last year's level of 19.7 billion euros, down from an earlier forecast of a slight decrease.

Group core earnings are now projected to be 15.83 billion euros, according to LSEG estimates cited by Reuters.

The adjusted return on sales for Mercedes-Benz's passenger cars is now estimated to be between 7.5% and 8.5% in 2024, revised from the previous estimate of 10% to 11%. This implies an anticipated adjusted return on sales of approximately 6% in the second half of 2024.

Chief Executive Ola Kaellenius expressed uncertainty regarding the duration of the company’s underperformance in China, stating he remains cautious for the foreseeable future.

Demand in China has been struggling due to disappointing economic growth and a severe real estate crisis, critical to Germany's export-oriented economy.

(Reuters contributed reporting.)