Fri Sep 20 07:47:04 UTC 2024: ## Mercedes-Benz Cuts Outlook Amidst China Slump
**Stuttgart, Germany:** Mercedes-Benz Group AG has slashed its financial outlook for the year, citing a sharp decline in sales in its largest market, China. The luxury automaker now expects its adjusted returns for the car division to fall between 7.5% and 8.5%, significantly lower than the previous forecast of up to 11%.
The company attributes the revision to a weakening macroeconomic environment in China, specifically pointing to a downturn in the real estate sector and weaker consumer spending. Sales of high-end models like the S-Class and Maybach have been particularly affected, with affluent buyers becoming more hesitant to purchase.
This downturn reflects a broader trend impacting German automakers, who are facing pressure from the transition to electric vehicles and declining Chinese market profits. Volkswagen recently abandoned a labor agreement and is considering factory closures in Germany, while BMW has also lowered its earnings guidance due to similar challenges in China and sluggish electric vehicle sales.
Mercedes-Benz’s profit warning, which predicts earnings before interest and taxes to be significantly lower than last year, has taken industry analysts by surprise. RBC automotive analyst Tom Narayan commented, “We would expect shares to react negatively.”
The company’s struggles extend beyond China, with European sales also under pressure. August saw a 13% drop in deliveries across Europe, contributing to a 3% decline over the first eight months of the year. The lackluster performance of electric vehicle sales is particularly concerning, as it could expose automakers to significant fines for failing to meet EU CO2 regulations set to tighten next year.
First Piper 