Mercedes-Benz mentioned Thursday it deliberate hefty value cuts after its 2024 earnings plunged by nearly a 3rd amid a hunch in China and weak electrical automotive gross sales, as Germany’s auto sector reels.
The German auto big’s internet revenue fell 28 p.c from the earlier yr to 10.4 billion euros ($10.8 billion), whereas revenues additionally slid about 4 p.c to 145.6 billion euros.
The group introduced plans to slash manufacturing prices by a tenth by 2027 and likewise gave a bleak outlook for this yr, saying it anticipated decrease gross sales and leaner revenue margins.
“To make sure the corporate’s future competitiveness in an more and more unsure world, we’re taking steps to make the corporate leaner, quicker and stronger,” CEO Ola Kallenius mentioned in a press release.
It was the newest unhealthy information from one of many nation’s automotive titans, that are reeling from a stuttering shift to electrical autos, fierce competitors in China from native rivals and weakening demand elsewhere.
The fading fortunes of the auto sector have develop into symbolic of a broader malaise affecting Europe’s struggling high financial system — a key battleground forward of a basic election on the weekend.
The Stuttgart-based group, which employs 166,000 individuals worldwide, didn’t instantly give particulars on the cost-cutting drive, corresponding to on potential job losses.
In China, Mercedes’s greatest single market, gross sales dropped seven p.c in 2024.
German producers all invested closely in China in latest many years and got here to depend on the world’s greatest auto marketplace for a hefty chunk of their gross sales and earnings.
However the image has modified dramatically, with profitable Chinese language rivals, corresponding to electrical carmaker BYD, quickly eroding overseas producers’ market share, as they provide technology-packed fashions that attraction to native shoppers.
Automobile gross sales have additionally been lacklustre usually on this planet’s second-biggest financial system because it battles a slowdown.
Total Mercedes’s gross sales fell 4 p.c final yr from the earlier yr, hit by a drop of 23-percent in gross sales of electrical autos.
It was the newest proof that the transition to EVs is stalling, a slowdown that’s weighing closely on carmakers throughout Europe.
On the outlook for 2025, the producer mentioned it anticipated barely decrease revenues than final yr “in a market atmosphere that is still difficult” as car gross sales gradual additional.
It additionally mentioned it anticipated revenue margins of between six and eight p.c for this yr, after a determine of above eight p.c in 2024.
Regardless of the awful outcomes, the carmaker sought to strike an upbeat notice, saying it anticipated gross sales to choose up within the coming years because of the launch of recent and refreshed fashions.
There was a gradual stream of unhealthy information from Germany’s auto sector in latest occasions.
In December, Europe’s greatest carmaker Volkswagen introduced plans to chop 35,000 jobs in Germany by 2030 though it held off from closing factories on house turf for the primary time, as had been feared.
BMW has additionally seen its earnings hunch as a consequence of worsening gross sales in China whereas a string of auto suppliers, corresponding to Continental and Bosch, have slashed jobs.
AFP
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