Mercedes-Benz Q3 Operating Profit Down 48%... "Impact of China's Economic Slowdown"

Germany's Mercedes-Benz Group's operating profit has halved compared to a year ago. The main cause of the decline in operating profit is attributed to the contraction of consumer sentiment in China.

According to Mercedes-Benz's earnings announcement on the 25th (local time), the operating profit before interest and taxes (EBIT) for the third quarter of this year was 2.517 billion euros (approximately 3.78 trillion KRW), down 48.0% from 4.842 billion euros (approximately 7.28 trillion KRW) in the third quarter of last year. Sales decreased by 6.7% from 37.01 billion euros (approximately 55.65 trillion KRW) to 34.528 billion euros (approximately 51.94 trillion KRW).

Mercedes-Benz held a world premiere event on April 24th at the 'Art District 798,' an art complex in downtown Beijing, China, unveiling the electric G-Class vehicle, the 'The All-New Mercedes-Benz G580 with EQ Technology' (G580). The photo shows the front row of the G580. [Image source=Yonhap News]

In particular, EBIT in the core passenger car segment plunged 63.8% from 3.312 billion euros (approximately 4.98 trillion KRW) to 1.198 billion euros (approximately 1.8 trillion KRW). Harald Wilhelm, Chief Financial Officer (CFO), said, "We generated solid cash flow even during difficult times," but added, "The third-quarter results do not meet our expectations." On the morning of the same day, Mercedes-Benz shares traded on the Frankfurt Stock Exchange in Germany fell by about 3% compared to the previous closing price. Mercedes-Benz shares have dropped 22% over the past six months.

With consumer sentiment deteriorating in both China and Germany, Mercedes-Benz, which has a large proportion of luxury sedans, is facing a greater crisis. According to the economic newspaper Handelsblatt, deliveries of Mercedes-Benz's top luxury sedan, Maybach, in China decreased by 56% over one year. Handelsblatt explained, "China has been Mercedes-Benz's largest market and the core of its luxury strategy in recent years, but consumer sentiment among Chinese entrepreneurs and high-income professionals has weakened," adding, "A significant portion of the middle class has failed in real estate investments and is just holding onto their money."