Mercedes cuts margin outlook after EV, China sales plunge

MERCEDES-BENZ Group’s earnings plummeted 19 per cent in the second quarter as sales of its passenger electric vehicles dropped sharply and demand in China weakened.

Group earnings before interest and tax fell to 4.04 billion euros (S$5.88 billion), Mercedes said on Friday (Jul 26). The company slightly lowered its carmaking margin outlook to as much as 11 per cent from 12 per cent. 

Mercedes joins a growing list of carmakers struggling with weaker demand in China and a drop in purchases of battery-powered cars in Europe after governments began reducing or ending financial incentives. Only BMW, Mercedes’ biggest premium-car rival, has bucked the trend in Europe after rolling out several new battery models.

Global sales of Mercedes’ passenger cars declined 3.7 per cent to around 496,700 vehicles compared with the same period last year, with sales of fully electric vehicles falling by a quarter. Citing model changes and subdued demand in China, sales of top-end models fell 17 per cent.  

Mercedes has cut back electrification plans, including adjusting its battery ambitions, as it prepares to spend more on its lucrative line-up of combustion-engine cars. At the same time, it’s planning to roll out new all-electric models after its first generation of battery-powered cars fell short of expectations.  BLOOMBERG