German car manufacturer Mercedes-Benz expects its profit to be under considerable pressure this year. Like other European car manufacturers, Mercedes is struggling with declining vehicle demand in key markets such as Europe and China.
Part of the decline in sales is also due to the difficult transition to electric driving. Despite significant investments in electric cars, sales of these vehicles lagged behind expectations.
Mercedes saw its operating profit fall by 30 percent last year. This year, the company expects its operating profit to be significantly lower than in 2024. Turnover and car sales are also likely to be slightly lower. To turn the tide, Mercedes wants to reduce production costs by 10 percent in the coming years. The company also expects a lot from launching new models in the coming years, which are expected to boost sales.
Under CEO Ola Källenius, Mercedes has focused primarily on its most expensive vehicles and has moved away from less profitable entry-level models such as the compact A-Class. However, weak demand, especially in China, for top models such as Maybach limousines, AMG performance cars, and the G-Wagon is weighing on results.
Uncertainty
Mercedes announced last month that global sales, including the luxury brands Maybach and AMG, fell by 3 percent last year to almost 2 million. Sales declined in China and Europe, including the German home market. Sales did increase in North America and elsewhere in the world. Sales of fully electric cars shrank by almost a quarter.
The increasing trade tensions worldwide and the threat from US President Donald Trump to impose import duties on cars are also causing more uncertainty among car manufacturers. Trump said this week that he plans to impose tariffs of about 25 percent on cars entering the United States in April. Mercedes imports about 63 percent of the vehicles it sells in the U.S.
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