Mercedes-Benz Updates Margin Targets for 2025

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 [e-mail]

(END) Dow Jones Newswires

May 19, 2022 07:15 ET (11:15 GMT)

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