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Mercedes-Benz Shares Dip Amid Profit Guidance Revision
An employee conducts final inspections on a Mercedes-Benz C-Class at the Mercedes-Benz US International factory located in Vance, Alabama.
Recent market developments indicate a challenging landscape for Mercedes-Benz, as the automaker’s shares plummeted over 8% on Friday following a downward adjustment in its financial forecasts for the year. This update places Mercedes alongside other manufacturers grappling with headwinds in the global auto market, notably sluggish demand in China and ongoing trade tensions.
On Thursday, the company communicated that it now anticipates its group earnings before interest and taxes (EBIT) to fall “significantly below” the previous year’s performance. The adjusted return on sales is now projected to be between 7.5% and 8.5%, a notable decrease from the earlier forecast of 10% to 11%.
As a result, shares experienced a slight recovery, trading 7% lower by 9:15 a.m. London time. However, the broader auto sector faced a downturn as well, with indices declining by 3.2%. Competitors such as Volvo and Stellantis reported losses of 4% and 2.7%, respectively.
The revision in Mercedes’ outlook was attributed to “a further deterioration of the macroeconomic environment,” with a particular emphasis on the impact of declining consumer spending in China alongside a prolonged slump in the Chinese real estate market. The firm elaborated that this downturn adversely affected overall sales volumes in China, including the luxury segment of the market.
Looking ahead, Mercedes indicated that the sales mix for the second half of 2024 is expected to remain stable in comparison to the first half, which suggests that the market conditions will not improve as previously hoped.
In a similar vein, fellow German manufacturer BMW also observed a significant drop in its stock price last week after it announced a revised outlook for its profit margins in 2024, driven by declining sales in China and complications associated with a braking system from Continental.
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