Mercedes-Benz Updates Margin Targets for 2025
May 19 2022 - 7:30AM
Dow Jones News
By Kim Richters
Mercedes-Benz Group AG raised some mid-term margin targets as it
updated its strategy as a standalone car maker after separating
from its commercial-vehicles business last year and said it plans
to increase its share of top-end vehicles.
The German luxury auto maker said Thursday that it is targeting
an operating margin of around 10% in unfavorable market conditions
and around 12% in fair conditions by 2025. It had previously guided
for a mid- to high-single-digit margin in unfavorable and
high-single-digit margin in fair conditions.
In a favorable market environment, Mercedes-Benz now aims for an
operating margin of around 14% by 2025 compared with its previous
guidance of a double-digit. It also expects a margin of around 8%
in the case of very unfavorable conditions.
In 2021, the company's cars and vans business reported a margin
of 12.4%.
Like its peers, Mercedes-Benz is facing multiple headwinds this
year, including rising raw-materials costs, the continuing
semiconductor shortage and other supply-chain woes related to the
war in Ukraine.
"Unforeseeable geopolitical or macro-economic shifts and raw
material premises obviously cannot be part of this target grid, but
Mercedes-Benz is redesigning the company to ensure stronger
profitability even in a tougher environment," said the company.
At the strategy event on Thursday, the car maker said it wants
to use more than 75% of its investments to make products for the
most profitable market segments and increase the sales share for
top-end vehicles by around 60% by 2026 compared with levels in
2019. In 2019, Mercedes-Benz sold around 250,000 top-end vehicles,
which a sales share of around 11% that year.
Mercedes-Benz also confirmed plans to become fully electric by
2030 where market conditions allow and become carbon-neutral by
2039.
Write to Kim Richters at kim.richters@wsj.com
(END) Dow Jones Newswires
May 19, 2022 07:15 ET (11:15 GMT)
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