Mercedes-Benz is feeling the financial strain of its transition toward electric vehicles, as the automaker reported a sharp drop in profits for the third quarter of 2024.
A 53% Drop
The German luxury brand's operating profit took a 53% hit, down to €1.7 billion (around $1.8 billion), compared to the same period last year.
The drop reflects intensified competition, especially in the Asian market, and a broader slowdown in China, traditionally one of Mercedes’ strongest markets.
These challenges, combined with the anticipation of new model releases, have impacted the company’s recent performance, according to the brand’s latest earnings report. The highly anticipated refresh of the Mercedes G-Class, set for release in the next quarter, has also added pressure on current sales.
A Particularly Hard Hit
The company sold approximately 503,000 vehicles over the quarter, a slight decrease of 1% from the same period last year. This dip marks a total sales decline of 4.3% year-over-year.
However, despite the decrease in overall sales, Mercedes managed a 2% rise in cash flow, reaching €2.39 billion ($2.5 billion), according to Boosted.
Mercedes-Benz Cars took a particularly hard hit, with operating profit dropping by nearly 64% and revenue falling 7% to €34.5 billion (about $36 billion).
In response, Mercedes has adjusted its profit margin expectations for the year, acknowledging that the challenges in China have had a significant effect on overall results.
In a statement, CEO Ola Källenius pointed out that Chinese consumers have been tightening their belts amid economic uncertainty and a real estate crisis, which is hitting high-end car sales particularly hard.
Mercedes isn’t the only automaker feeling the pinch in this market shift; Volkswagen is also facing financial strain. Volkswagen’s CFO recently warned that the company has just a few years to stabilize its finances amid massive debt.
