A giant Mercedes logo is pictured in Frankfurt am Main, western Germany, on September 11, 2023. Photo by Kirill KUDRYAVTSEV / AFP
Frankfurt, Germany: German luxury carmaker Mercedes-Benz on Friday reported a sharp drop in second-quarter net profit on weaker sales of electric vehicles and cooling demand in key market China.
Net profit fell by 15.9 percent compared to the same period last year, to just over 3.0 billion euros ($3.3 billion), the Stuttgart-based group said.
Group revenues were down nearly four percent to 36.7 billion euros.
The lacklustre results prompted Mercedes to lower its profit margin target for 2024. It now expects an adjusted return on sales in the range of 10-11 percent, compared with 10-12 percent previously.
The group said the auto sector continued to face "a degree of uncertainty" in terms of the global economic outlook, geopolitical events and trade policy.
Sales of Mercedes cars fell by 3.7 percent to 496,712 units between April and June, which the group said was partly due to "model changeovers" as customers waited for new models to arrive before buying.
It also blamed a "subdued market environment" in Asia, with sales in China down six percent as European carmakers grapple with fierce competition from local brands particularly in the electric segment.
The group's overall sales of battery-electric vehicles (BEV) plummeted by 25 percent in the second quarter, hammered by the growing Chinese competition and softer demand in Europe as governments pare back incentives.
Mercedes was nevertheless eyeing a pick-up in sales in the second half of the year, CEO Ola Kallenius said, helped by "launches of new models particularly in the top-end segment".
The group confirmed that it expected full-year revenues to come in at the same level as a year earlier.
