Munich Thanks to high prices and higher sales, the car manufacturer Mercedes-Benz earned better than expected on the financial market in the first quarter. According to preliminary figures, the adjusted return on sales in the main business area of passenger cars was 14.8 percent, while analysts were expecting an average of 13.4 percent. As the Dax group explained in a mandatory notification on Thursday evening, the smaller vans division performed even better with a return of 15.6 percent (consensus: 13.1 percent).
Adjusted operating profit in the quarter was 5.5 billion euros, almost four percent more than a year ago. The strong profitability led to liquid funds of 2.2 billion euros in the industrial business – one billion euros more than estimated by the industry experts.
The brand with the star increased sales from January to March by three percent compared to the same quarter of the previous year to around 500,000 cars. But especially profitable top models have sold well. In the first quarter, Mercedes was able to increase sales in the so-called top-end segment by almost a fifth – to 91,800 units.
Mercedes-Benz: Ola Källenius’ luxury course pays off
The AMG models were particularly in demand. With more than 40,000 vehicles sold, the tuning subsidiary achieved a new sales record from the beginning of January to the end of March. Sales of the G-Class off-road vehicle also increased noticeably in this period to 10,200 units. This corresponds to an increase of 23 percent. The luxury sub-brand Maybach still achieved a growth rate of eight percent.
The luxury course of CEO Ola Källenius continues to pay off. For months, the Swede has been pushing the sale of particularly heavy and expensive sedans and SUVs, with which Mercedes generates substantial profit margins.
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Regionally, Mercedes recently recorded the strongest growth in the German home market and in Europe as a whole. Business in North America and China, on the other hand, grew only marginally, so that the group was only able to sell half a million vehicles in total sales, only three percent more cars than in the same quarter of the previous year.
For Mercedes frontman Källenius, class comes before mass anyway. The manager does not want to take part in the discount battle that the electric car manufacturer Tesla has sparked and which is currently spilling over from China to more and more markets. Especially since the cost pressure in the industry is increasing anyway, for example due to high energy prices.
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“We ourselves also pay significantly more for electricity and gas,” Källenius warned in March in an internal letter to his managers. Raw material prices, particularly for steel and light metals, would also remain at a high level. “In addition, the cost burden of battery raw materials is increasing,” explained Källenius. His appeal to his own managers: maintain cost discipline. The competition is getting tougher.
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Meanwhile, most analysts on the stock exchange are becoming more and more optimistic about Mercedes. Daniel Röska, car expert at asset manager Alliance Bernstein, believes that the group is in a “good starting position” to be able to raise its vehicle prices even further.
Mercedes has already increased the average selling price of its cars by 43 percent between 2019 and 2022 – from 51,000 to 73,000 euros. The reason for this is, among other things, that the group has largely stopped unprofitable fleet business such as the sale of vehicles for the taxi trade.
Expert Röska welcomes this strategy and wouldn’t be surprised if Mercedes revised upwards its earnings forecast later in the year. So far, Mercedes has forecast a return on sales in 2023 of twelve to 14 percent in the car division and between nine and eleven percent in the van division.
Investors are also confident. Mercedes shares rose by more than two percent on Friday. Full quarterly figures will be released on April 28th.
With agency material.
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First publication: 04/20/23, 21:33 (last updated: 04/20/23, 21:44).