German automaker Mercedes-Benz reported a significant decline in profits for the first quarter due to supplier issues impacting luxury car sales. Net profit for the first three months of the year fell by 24.6 percent compared to the same period in 2023, amounting to three billion euros ($3.2 billion) down from four billion euros.
Although this figure was better than analysts’ predictions, who forecasted a profit of 2.8 billion euros, according to financial data firm FactSet.
Revenue for the first quarter dropped by 4.4 percent to 35.9 billion euros due to the sales impact caused by the supplier issues. Mercedes attributed its performance to “lower raw material prices, tight cost control,” and strong performance in its vans division.
Revenue in the utility vehicles segment increased by six percent to 4.9 billion euros, leading to a 22.4-percent rise in the division’s operating profit. However, the strength of the van business couldn’t compensate for the challenges faced by the core car unit.
A 7.5 percent drop in revenue for the first quarter, totaling 25.7 billion euros, was attributed to “supplier bottlenecks and model changeovers in the top-end segment.”
Mercedes reported an eight percent decrease in car unit sales, reaching just under 463,000 units. Similarly, sales of battery vehicles saw a matching decline, with approximately 47,500 units sold.
The company noted solid results in all regions except Asia.
Looking forward, Mercedes maintained its outlook, expecting supply issues to improve throughout the year.
The company anticipates second-quarter volumes to be better, with sales levels in the first quarter considered the low point.
Overall, Mercedes expects sales in 2024 to be on par with the previous year.
