Mercedes scores strong in 2022, this year will be more difficult

Mercedes-Benz sold some 2 million vehicles last year, a 5% increase compared to 2021. Turnover increased by 12% and reached € 150 billion, while the benefice was more than a third higher, landing at almost € 15 billion. For 2023, anticipations are a bit subdued, due to delivery shortages, higher costs  and an unsure overall market.

”We have redesigned Mercedes-Benz to be a more profitable company thanks to our focus on desirable products and disciplined margin and cost management,” said Ola Källenius, CEO of Mercedes-Benz Group AG. “We cannot control macro or world events, but 2022 is a case in point that we are moving in the right direction,” he added.

Electric and high luxury

Mercedes produced almost 150 000 full EVs last year, 67% more than in 2021. The forecast for 2023 lies around 230 000, more than one-tenth of total production. The latter is supposed to be the same as this year.

The biggest reason for the high benefit is that the sales of Mercedes-Benz are continuously moving up to higher segments. The biggest increases in sales were in the upper luxury segments (S-Class) (+6%) and even more so AMG (+8%) and Mercedes-Maybach (+41%).

In the lower classes, Mercedes sold cars with more and more expensive options. As a result, the average price of a Mercedes last year rose to € 72 900, an absolute record, confirming that the German car manufacturer is really shifting to (high) luxury individual transport.

“In addition to delivering strong financial results, the team accelerated our pace as a technology leader in electric and automated driving, Ola Källenius continued. “The next chapter in our transformation will be revealed during the Mercedes-Benz Strategy Update in California on February 22, focusing on the Mercedes-Benz Operating System (MB.OS).“

Prudence for next year

For this year, the Mercedes-Benz top brass is somewhat more prudent. Källenius expects a slightly higher turnover still but no higher sales and a slightly lower profit margin or adjusted Return on Sales, expected to turn between 12 and 14%, where it was 14,8% last year.

Delivery delays will get much shorter this year, and the order book is still pretty well filled for the first half of the year, but after that, uncertainty looms. “In Europe, incoming orders are more sluggish; however, the order bank supports sales into the first half of the year,” the press release says. “In the United States, demand is seen on a good level. In China, the fourth-quarter COVID-19 effect has led to a spillover impact on sentiment in the first quarter. Momentum is seen returning post-Chinese New Year, preliminary indications show.”

And Mercedes-Benz emphasizes it wants to be prudent: “The company is taking a prudent view and sees unit sales of Mercedes-Benz Cars at the prior-year level. Overall Top-End vehicle sales are expected to be slightly above the prior year, thanks to new additions to the portfolio, including the new EQS SUV and later the Mercedes-Maybach EQS SUV.”

“Sales of battery electric vehicles (BEV) are expected to approximately double. The used vehicle business is expected to be slightly negative compared to 2022. Research & Development spending is expected to be slightly above the prior year. Investments in property plants and equipment are seen significantly above, mainly due to the MMA platform.”

Last but not least, the Mercedes-Benz Group expects the average CO₂ emissions of new passenger cars in Europe (European Union, Norway, and Iceland) for 2023 to decline significantly compared to the previous year. With the further expansion of the fleet of electric vehicles, it can be assumed that the CO₂ requirements in Europe will also be met in 2023.

Vans and Mobility

Of the € 150 billion turnover, more than 111 billion are for Mercedes-Benz Cars, and the rest is shared by Mercedes Vans and Mercedes-Benz Mobility, as the trucks have been a separate company since last year.

Total Mercedes-Benz Vans sales are seen as flat, and the adjusted Return on Sales is expected to be in the range of 9% to 11%. Net pricing is expected to remain flat. Based on current assumptions, it is targeted to compensate for inflation-related cost increases, supply chain interruptions, and one-time commodity charges. Investment in property, plants, and equipment, and in R&D spending, is seen significantly above the prior-year level due to investments into the VAN.EA electric platform.

The portfolio volume of Mercedes-Benz Mobility is seen to be slightly lower. The adjusted Return on Equity is seen in the range of 12 to 14% for 2023. This includes Operational Expenditures increases of the recently announced charging network.