Photo: Mercedes-Benz-Kiev
Shares of Mercedes-Benz Group AG saw their sharpest drop in four years, driven by China’s economic slowdown, which has heavily impacted luxury car sales. According to Bloomberg, the stock fell by 8.4% in Frankfurt, marking the largest intraday decline since 2020. This news also negatively impacted the broader auto industry, with BMW shares falling by 4.4%.
Decline in top model sales hits profits
Luxury models such as the S-Class and Maybach have been particularly affected by the crisis in China. As a result, Mercedes lowered its profit expectations, forecasting an adjusted profit margin between 7.5% and 8.5%, down from the previous 11%. CEO Ola Källenius announced plans to boost sales of new products in China to mitigate the downturn.
Industry challenges: transitioning to electric vehicles and China’s impact
Mercedes’ profit warning highlights broader challenges for the German automotive industry. The sector is grappling with an uneven shift to electric vehicles and reduced demand in China. Volkswagen AG recently reported potential factory closures in Germany due to declining demand, and last week BMW revised its profit outlook due to weak sales in China.
Vehicle recalls in China add pressure on Mercedes
In addition to falling sales, Mercedes announced the recall of over 520,000 vehicles in China due to wheel speed sensor issues. This follows a report from Chinese regulators citing potential malfunctions that could compromise vehicle safety.
