VShey, dear car. Manufacturers produce less of them, but they sell them at higher prices, like Mercedes-Benz. The German group published, on Wednesday April 27, good results in the first quarter, despite the shortage of electronic chips, the war in Ukraine, the outbreak of Covid-19 in China and inflation.
While its sedan and utility sales fell by 10% (487,000 units), its net profit increased by 3% (3.6 billion euros), and its operating margin reached 16.4% , enough to delight financial analysts. The Stuttgart giant has just changed its name: Mercedes-Benz Group, instead of Daimler, kept for its heavyweights (Daimler Truck), which have been introduced on the stock exchange. The image of a top-of-the-range producer is reinforced.
The new becomes unaffordable again
The rule for a luxury brand also applies to other manufacturers: selling less does not prevent you from earning more, including outside of a crisis period. This is the winning bet of Carlos Tavares, boss of Stellantis (PSA, Fiat-Chrysler), which generated a historic profit of 13.4 billion euros in 2021. The market is driven by demand that supply is unable to satisfy, resulting in very long months of waiting, or even a freeze on orders, as at Volkswagen.
Prices are rising, discounts are gone, and automakers favor their premium models when they run out of semiconductors. It’s good economic warfare. Anti-pollution standards, safety or comfort equipment, everything has pushed prices up. The 50% additional cost of electricity amplifies the trend.
After being democratized over the decades, the new car – a purchase for six occasions in France – has again become unaffordable for many households. It takes seventeen months of minimum wage to buy one at an average price of 26,789 euros, as in the 1970s, note TheArgus. Even if we are far from the 38 minimum wage of 1955, the financial effort is increasing. Not everyone can afford a Mercedes S-Class at 100,000 euros (base price), but the Renault group’s low-cost Dacia is also moving upmarket. And in price.