Mercedes-Benz worried about profits
Mercedes-Benz has admitted that their profits may falter this year due to weak market conditions. The decline within the European car market has finally caught up with the luxury car market.
For years the mass passenger car market has been struggling with sales. Production figures are higher than what is actually being sold. Jobs and factories are now under tremendous pressure. The luxury car market is very unlikely to reach those depths but there is still a major concern.
Dieter Zetsche, the Chief Executive of Mercedes-Benz has already officially stated that profits will fall for the latter part of the year, not reaching the highs of the first half.
The Chinese car market has been very competitive amongst the luxury sector. The world’s biggest car market has Audi dominating. Mercedes-Benz is finding it difficult to compete. Pricing of vehicles is quite important at the moment over in China. Various incentives have been offered, helping to ease those pressures.
Mercedes-Benz sales managed to increase by 6 per cent for the first 8 months of 2012. Both Audi and BMW saw their sales increase in double figures.
Porsche, the sports car company are also finding it difficult to compete predicting a slowdown in sales for next year.
Shares for BMW, Mercedes-Benz and Volkswagen have fallen recently. Mercedes-Benz is determined to counter their fall in profits with a line of new strategies. These have not yet been revealed.
Their profits read at €2.57 billion for the first six months of 2012. They had originally targeted a full year profit of €5.19 billion. In terms of worldwide sales, Mercedes-Benz has been falling behind both BMW and Audi.
Some may have expected this type of performance from Mercedes-Benz. They had previously stated that 2012 would be a year of transition. A fall in profits and sales are not necessarily as bad as they seem. A regeneration of models, which will be aimed at the younger market are expected to increase sales over the next few years.
Reaching this year’s expected sales target is now seemingly out of the question. The market conditions are simply too tough to deal with.
Mercedes-Benz profits are clearly a major issue. Their truck sales have been performing quite well and are number one in that particular segment. Will they be able to catch up with the likes of Audi and BMW in the future?