Profitable top models
Mercedes significantly more profitable than expected
4/21/2023 11:14 am
Brisk demand for high-priced models ensures a good start to the year for car manufacturer Mercedes. The Stuttgart report the first quarterly figures above expectations.
The car manufacturer Mercedes-Benz started the year better than expected thanks to high prices and brisk demand. According to preliminary figures, the adjusted return on sales in the main business segment of passenger cars was 14.8 percent, while analysts had expected an average of 13.4 percent. As the DAX group explained, the smaller Vans division performed even better with a return of 15.6 percent (consensus: 13.1 percent).
The adjusted operating result between January and the end of March amounted to 5.5 billion euros, almost four percent more than a year ago. According to Factset, analysts had expected a decline of 7 percent. The strong profitability led to liquid funds of 2.2 billion euros in the industrial business – one billion euros more than estimated by the industry experts. The brand with the star had increased sales in the first quarter by three percent to around 500,000 cars over the year.
The carmaker benefited from high demand for particularly profitable top models such as the Mercedes Maybach and the G-Class. “The company also delivered solid growth rates in both battery-electric and top-end vehicles in the first quarter,” the automaker said. Van sales soared by 12 percent to almost 99,000 vehicles, a record for a first quarter.
Expert: Auto stocks could split more into two classes
With the strong start to the year, Mercedes’ profit margin is above its own target corridors for the year as a whole: the return for cars in 2023 should be between 12 and 14 percent, and for vans between 9 and 11 percent. Full quarterly figures will be released on April 28th.
The good performance was received positively on the stock exchange: the robust condition of Mercedes-Benz and other car manufacturers (with the exception of Tesla) continues, according to Jefferies. The group convinced with good sales prices and sales. “Mercedes shows that they get their margin from market segments where Tesla is not present,” says a dealer. Ultimately, car stocks could be divided even more into two classes: mass manufacturers with margin pressure and premium manufacturers.
In view of the strong development at Mercedes, market observers may also expect preliminary key figures for the first quarter at BMW. BMW actually doesn’t want to report on the first quarter until May 5th. Like Mercedes, the Munich-based group is benefiting from the high demand for premium cars and persistently high sales prices for top-end models. The increasing pressure of competition in volume business has passed the manufacturers of luxury cars – so far.