Mercedes-Benz made significantly less profit in the third quarter due to delivery problems and tougher competition. Adjusted operating profit fell by eight percent to 4.9 billion euros from July to September compared to the same period last year. The car manufacturer announced this on Thursday.
In the main passenger car business area, the return fell by around two percentage points to 12.4 percent, as analysts expected. The smaller Vans division continued to earn very well and increased the margin to 15 percent. The DAX group referred to the subdued market environment, intense price competition, especially for electric cars, and the decline in sales of passenger cars. Chief Financial Officer Harald Wilhelm spoke of a solid result that proves the car manufacturer’s resilience.
Mercedes-Benz delivered 3.7 percent fewer vehicles in the last quarter with 510,564 vehicles. Over the course of the year, sales of 1.53 million units were still slightly higher than the previous year. The reason for the drop in sales was a shortage of 48-volt batteries, which slowed down production of the GLC combustion engine model and has not yet been resolved. The largest supplier, Bosch, was stuck here, as the foundation group itself had admitted. But sales of the highly profitable S-Class luxury sedan were also affected, partly because of the gloomy economic environment. Sales fell by 1.4 percent to 37.2 billion euros from July to September, and overall profits fell by seven percent to 3.7 billion euros.
Higher costs and production losses are weighing on the VW core brand
Things aren’t looking good at Volkswagen either at the moment. Higher costs and production losses due to flood damage at an important supplier are causing problems for the group. The company announced on Thursday that volume business with the core Volkswagen brand was particularly affected. VW finance chief Arno Antlitz said he was dissatisfied with profitability, which fell short of ambitious targets in the third quarter.
Volkswagen boss Oliver Blume has ordered a comprehensive restructuring of the group, with profit margins group-wide increasing to ten percent in the long term. The Core brand group alone, which includes Volkswagen Commercial Vehicles, Skoda and Seat, is expected to achieve a return of eight percent by 2025. In the past quarter, revenues in the brand group increased by 13.9 percent to 32.3 billion euros. Operating profit improved by 11.7 percent to 1.2 billion euros, and the profit margin fell accordingly to 4.9 percent.
Volkswagen is currently negotiating with the works council about a savings program for the core brand, and the results are expected to be presented this year. In the summer, Volkswagen was hit by the floods in Slovenia, which also severely damaged the facilities of important suppliers. As a result, the production lines were sometimes idle for weeks, particularly in the volume business.