Mercedes-Benz Group’s earnings plummeted 34 per cent in the first quarter, weighed down by model changes and sluggish demand for electric vehicles.

Adjusted group earnings before interest and tax dropped to 3.6 billion euros (S$5.24 billion), Mercedes said on Tuesday (Apr 30). The company, which left its outlook for the year unchanged, said its car making margin was 9 per cent – below its annual target – hit by high costs of model upgrades. 

The German luxury-car maker has run into problems with its strategy to bolster profits by selling more top-end cars, such as the G-Class off-roader and E-Class sedans. In the first three months of the year, consumers held off on purchases as they waited for new or updated versions of the vehicles to come out. 

Mercedes expects sales to increase in the coming quarters, with the share of its most expensive vehicles rising in the second half of the year. While the company expects the market in China to improve, the US was the only region where it sees “solid momentum for sales and demand.”

A widespread slump in demand for EVs also hit Mercedes, which saw orders of all-electric models slow. Supply bottlenecks added to the challenges, hitting production of its GLC and E-Class vehicles. Mercedes said the blockage is easing.

In February, the company walked back its EV sales targets, forecasting that the share of fully electric and plug-in hybrid vehicles will remain roughly flat this year at 19 per cent to 21 per cent of overall sales. BLOOMBERG

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL