BERLIN (Reuters) -Mercedes-Benz expects the adjusted return on sales of its cars division for the full year to hit the lower end of its 12-14% forecast, the company said on Thursday, as it reported a drop in third-quarter earnings due partly to lower deliveries.
The luxury car maker described the market environment as “subdued” and “marked by intense price competition, particularly in the electric vehicle segment”.
Car makers from Ford to Tesla have been slashing prices throughout the year in markets from the United States to China to stoke demand, particularly in the EV market, but Mercedes-Benz has resisted following suit as it focuses on boosting margins over volume sales.
But higher inflation, a 329-million-euro headwind from foreign exchange, and supply chain-related costs dampened third-quarter earnings, the company said, echoing Porsche who warned in their Q3 results on Tuesday that the luxury sector was not immune to macroeconomic woes.
Earnings before interest and taxes (EBIT) across the Mercedes-Benz Group fell 6.8% to 4.8 billion euros ($5.1 billion) with revenue down 1.4% at 37.2 billion euros.
The cars division reported a 12.4% adjusted return on sales, at the lower end of the annual forecast.
Mercedes-Benz Vans reported a stronger quarter with a 44% rise in EBIT to 715 million euros and an adjusted return on sales of 15%.
The car maker reported earlier this month a drop in overall sales of 4% in the third quarter, with top-end sales down 11%, partly caused by model changeovers and a supplier-induced shortage in 48-volt systems.
Car revenue dipped 3.8% due to the fall in deliveries but the average selling price remained stable, the company said.
Looking ahead, it expects the rate of sales from the first three quarters to remain at around the same pace in the fourth quarter, and did not adjust its full-year sales target of flat growth.
($1 = 0.9485 euros)
(Reporting by Victoria Waldersee, Editing by Rachel More and Jacqueline Wong)
