Mercedes-Benz Forecasts Lower Returns Amid Supply Chain

Mercedes-Benz, a leading luxury carmaker, reported an adjusted return on sales in its car division for 2023, meeting expectations at 12.6%. 

However, the company anticipates lower returns for 2024 due to persistent inflation and supply chain disruptions, projecting 10-12% for cars and 12-14% for vans, down from the previous year’s 15.1%.

Profitability Challenges Amid Inflation and Supply Chain Issues:

Inflation and supply chain-related costs have impacted Mercedes-Benz’s profitability, leading to tighter margins and lower returns. 

The carmaker faced supply snags and pricing pressures, especially in the electric vehicle segment, which strained margins and affected sales performance throughout 2023.

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Strategic Response and Pricing Adjustments:

Despite challenges, Mercedes-Benz implemented a strategy to mitigate cost pressures by passing higher expenses to customers. 

The company raised its average price by 2% to 74,200 euros and continued investing in research and development for future technologies, including the MB.OS platform aimed at enhancing innovation and competitiveness.

Performance and Comparative Analysis:

As the first of Germany’s top three carmakers to announce 2023 results, Mercedes-Benz is expected to maintain a competitive returns margin, reflecting its proactive approach to addressing market challenges. 

While group earnings before interest and taxes declined to 19.7 billion euros from 20.5 billion euros, revenue saw a modest increase of 2%.