STUTTGART (Reuters) – Mercedes-Benz on Thursday forecast lower sales profitability in 2024 at its cars and vans division, warning of “exceptional” uncertainty caused by conflict in the Middle East and Russia and tensions between China and the United States.
Bottlenecks in the supply chain for critical components remain a “significant risk factor,” Mercedes-Benz (OTC:) said in a statement.
The potential for an “even more pronounced slowdown in economic growth” could also impact auto markets, it added.
The luxury automaker reported adjusted sales margins for its auto division at 12.6% in 2023, in line with its forecast as inflation and supply chain costs and component shortages ate away at its profits.
For 2024, the company said it expects lower adjusted yields of 10% to 12% for cars and 12% to 14% for vans, compared with last year’s 15.1%.
Throughout 2023, the automaker warned that supply disruptions and inflation would weigh on sales, while price wars, especially in the electric vehicle segment, would weigh on profits.
However, Mercedes-Benz, the first of Germany’s top three automakers to report 2023 results, was expected to have the highest profit margin among the three, partly due to its strategy of passing on higher costs to customers.
The luxury car maker raised the average price by 2% to 74,200 euros ($80,395.70) and increased spending on research and development for future technologies such as the MB.OS platform.
Group earnings before interest and tax fell to 19.7 billion euros from 20.5 billion euros last year, despite revenue growth of 2%.
($1 = 0.9229 euros)