Berlin – Mercedes-Benz‘s sales fell by 53.8 percent on an annual basis during the third quarter of this year, amid weakness in sales of luxury vehicles, especially in the Chinese market.
This came in a statement by the company on Friday, in which it said that there had been a decline in sales of its luxury S-class and Maybach cars, especially in the Chinese market, which is facing economic challenges and weakness due to the real estate crisis that is ravaging it.
The company’s net profit in the last third quarter amounted to 1.72 billion euros, down from 3.72 billion euros in the corresponding period last year, a decline of 53.8 percent.
The company’s revenues declined by 6.7 percent during the period on an annual basis, to 34.53 billion euros, compared to 37 billion euros in the corresponding period last year.
The share of profit per share for the period fell to 1.8 euros, down from 3.44 euros in the corresponding period last year, a decline of 47.5 percent.
The company said in a separate statement: “The third quarter results do not meet our ambitions, however, Mercedes-Benz continues to generate cash flows even in difficult times.”
The company expected full-year sales to be slightly lower than in 2023; “Sales in the fourth quarter are expected to be around the third quarter,” he said, without providing figures.
Anatolia
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Interview with Automotive Analyst, Dr. Elena Müller
Editor: Thank you for joining us, Dr. Müller. Mercedes-Benz recently reported a staggering 53.8 percent drop in sales in the third quarter, largely attributed to declining interest in luxury vehicles in China. What are your thoughts on the implications of this decline for the luxury car market as a whole?
Dr. Müller: Thank you for having me. The sharp decline in Mercedes-Benz’s sales definitely raises concerns not only for the company but for the entire luxury automotive sector. The challenges faced in China, especially linked to the real estate crisis, highlight how interconnected global markets are. If affluent consumers are tightening their belts, it could signal broader economic issues.
Editor: You mentioned broader economic issues. How do you think this could affect customer sentiment in luxury markets moving forward?
Dr. Müller: Luxury consumers tend to be influenced by market stability and economic confidence. If they perceive ongoing economic instability, it might lead to hesitations in big-ticket purchases like luxury cars. It could also create an environment where brands have to rethink their marketing strategies and product offerings to cater to changing consumer preferences.
Editor: In light of these developments, do you think that Mercedes-Benz’s strategy to maintain cash flow is sufficient, or do they need to implement more substantial changes to their approach?
Dr. Müller: While generating cash flows is crucial, merely relying on that might not be enough in the long term. They need to innovate and adapt to consumer expectations, perhaps by investing in electric vehicle technology or diversifying their product line to attract a broader audience. Addressing customer concerns head-on could also be beneficial.
Editor: Interesting points, Dr. Müller. Now, considering these challenges, how do you believe luxury automotive brands should position themselves in the current market?
Dr. Müller: Brands should focus on enhancing their value proposition. This means not just high-end products but also improved customer experiences, sustainable practices, and tapping into the growing middle-class market in emerging economies. It’s all about creating a narrative that resonates with both affluent and aspirational buyers.
Editor: Thank you for your insights, Dr. Müller. For our readers, we’d love to hear your thoughts: Do you believe the decline in Mercedes-Benz’s sales is a sign of a larger trend in the luxury car market, or do you think it’s a temporary setback linked to specific economic factors? Join the debate in the comments below!
Low during challenging times is sufficient for recovery?
Dr. Müller: Maintaining cash flow is crucial, but it might not be enough on its own. While it gives the company the flexibility to navigate this downturn, they need to actively address the root causes of the sales decline. This could involve diversifying their product lineup, enhancing the appeal of their luxury offerings, or even exploring new markets outside of China. Adapting to consumer demands and ensuring that their luxury vehicles remain desirable are key factors in their potential recovery.
Editor: Given that Mercedes expects full-year sales to be slightly lower than last year, what strategies should they consider implementing to recover lost ground?
Dr. Müller: They could consider several approaches. First, focusing on innovation and sustainability could attract environmentally-conscious consumers. Additionally, revitalizing marketing efforts in segments where they see potential growth, such as electric vehicles, might help reset consumer interest. Lastly, expanding their presence in emerging markets where there is rising affluence could also mitigate their reliance on the Chinese market.
Editor: Thank you for your insights, Dr. Müller. It’s clear that navigating these turbulent times will require strategic agility from Mercedes-Benz and possibly the luxury automotive sector as a whole.
Dr. Müller: Thank you for having me. It’s an evolving landscape, and I’ll be monitoring how these trends develop in the coming months.
