In a bid to stay away from a discount war, German automaker Mercedes-Benz has affirmed its resolve to maintain premium pricing for its luxurious cars. This has been influenced by the difficulties the company goes through like model transitions and supply chain disruption, which led its quarterly profits to fall. The auto giant reported a 30% fall in first quarter EBIT to 3.86 billion euros (USD 4.13 billion), which slightly missed the edge of the 3.87 billion euro estimate of LSEG.
The return on sales for Mercedes-Benz cars dropped from 14.9% to 9.6% during the same period, combined with a decline in vehicle sales to a total of 462,978 units, which represented an 8% decrease. The company cited the drop in sales mainly due to that of ongoing model changes in the upscale segment and expenses related to supply chain disruptions.
Mercedes-Benz predicts to experience the highest sales volume only in the second quarter with the first quarter number being the lowest. Moreover, the organisation proclaimed its support for the status quo on rates, stressing the fact that they are at the top of the range.
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Even though there were difficulties, industrial free-cash-flow of the group accounted for 3.2% increase to reach up to 2.23 billion euros, thanks to the significant conversion rate. Harald Wilhelm, CFO of the financial department, outlined the group’s approach as conservative in uncertain global macroeconomic and geopolitical environments, while maintaining the 2024 outlook and forecasting a stable turnover and a slight decrease in EBIT compared to the previous year.
In a separate development, the company’s China chief said last week that it would continue to invest in tie-ups with Chinese partners like automaker BAIC Group since the country has played a pivotal role for the brand’s global strategy. Speaking on the sidelines of the Beijing auto show, Mercedes-Benz trucks chief Hubertus Troska said that China was the most dynamic new energy vehicle market. The company has displayed many electric models at the show to put rumours about its shaky future plans for electrification to rest.