Tear Sheet: Mercedes-Benz Group AG

Following on from a company-adjusted EBIT margin of 9.6% for the first half (H1) of 2024, which was already down from 14.1% for H1 2023, the company has issued new MBC guidance of 7.5%-8.5%, implying an EBIT margin of only 6%-7% for H2 2024. The margin contraction is due to an unfavorable product mix, indicated by a 22.5% drop in sales of "top-end" vehicles in the first half, net pricing turning negative, costs for stock-clearing measures, dealer support measures, and unexpectedly higher material costs. These pressures largely stem from China, where we see weak demand for higher-end premium and luxury cars, as well as intense price pressure in the broader market. China is a crucial market for MBC?s higher-priced cars,

...September 26, 2024 The profit warning for the Mercedes-Benz Cars' (MBC) division is reducing rating headroom. Following on from a company-adjusted EBIT margin of 9.6% for the first half (H1) of 2024, which was already down from 14.1% for H1 2023, the company has issued new MBC guidance of 7.5%- 8.5%, implying an EBIT margin of only 6%-7% for H2 2024. The margin contraction is due to an unfavorable product mix, indicated by a 22.5% drop in sales of "top-end" vehicles in the first half, net pricing turning negative, costs for stock-clearing measures, dealer support measures, and unexpectedly higher material costs. These pressures largely stem from China, where we see weak demand for higher-end premium and luxury cars, as well as intense price pressure in the broader market. China is a crucial market for MBC's higher-priced cars, accounting for just over 50% of sales of MBC's flagship S-Class luxury sedan. Outside China, we are also seeing intense price pressure in the battery electric vehicle...

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