Usually, as in many sectors, when the market is not doing well, there are only Premium and luxury manages to raise its head above water. But in the case of the auto industry, while luxury (Ferrari, Lamborghini, etc.) continues to perform well, the premium sector (Mercedes, Audi, BMW, etc.) is starting to slow down, as is the general consumer.

If anything, that’s what we see when we read Mercedes’ results for 2023, with the brand itself predicting a slightly bleaker year.

Competition in the Chinese market is becoming more and more intense, even for the premium class

In 2023, Mercedes’ net profit fell slightly by 1.9% to 14.53 billion euros. These low figures are mainly due to stagnant sales of luxury cars, a key sector for the brand, as well as high supply chain costs and inflation. Like many players in the automotive industry, Mercedes suffered from the consequences of the pandemic, which led to a shortage of components and an increase in the cost of electricity, in particular due to the situation in Ukraine. These problems remain, affecting the production and sales of the brand, especially in key markets such as China.
Despite a slight increase in annual turnover, reaching 153.22 billion euros, a 1.8% drop was recorded in the fourth quarter. Car sales, while generally stable at 1.5% growth, were more dynamic in the affordable segment (A-Class, B-Class, EQA, etc.), while luxury car sales remained stable. China, the largest market for Mercedes, has also become an arena for increased competition, particularly from Chinese manufacturers and Tesla. This competition, combined with geopolitical tensions and sluggish demand, has affected the brand’s performance in this market.

There will be more electric cars

Regarding profitability, although Mercedes-Benz achieved its target profit margin, this decreased to 12.6%, having decreased by two points for the year. Forecasts for next year remain cautious, with sales expected to remain flat and profitability to decline slightly. from 10 to 12%.
Despite these slowdowns, Mercedes remains committed to continuing the transition to more sustainable technologies, in particular by expanding its range of electric vehicles. Although sales of these cars have increased by 61% in 2023, their share of total sales remains modest at 12%. ” Energy transition is not a straight line, it is like a roller coaster with peaks and valleys“, – justified Ola Kellenius, the general director of the group.

“But we’re sticking to our promise to be carbon neutral by the end of the next decade.”– he assured.

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