2024 Mercedes-Maybach GLS
Germany's two biggest automakers, Volkswagen and Mercedes-Benz, posted lower profits on Tuesday as sales came under pressure.
Volkswagen confirmed its outlook for 2024, although it reported a sharp decline in profits at the beginning of the year due to weak car sales.
Net profit for the January-March period was €3.7 billion (R75 billion), down more than 20% on the same period last year.
However, the figure was higher than the 3.3 billion euros expected by analysts surveyed by financial data firm FactSet.
Although sales exceeded expectations, they were down slightly year-on-year to 75.5 billion euros.
“Our first quarter results show that the year is off to a slow start,” said Arno Antlitz, chief financial officer at Volkswagen, which owns 10 brands from Porsche to SEAT and Skoda.
Citing “solid” orders, he said: “We remain confident in achieving our 2024 financial targets.”
He said the launch of more than 30 new models and previously announced savings programs should boost VW as the year progresses.
Volkswagen sold 2.1 million vehicles in the first quarter, down 2% from the same period last year. Sales increased in Asia Pacific and South America, but decreased in Europe and North America.
Rising fixed costs also weighed on automakers.
However, the company said orders remained “high and stable” and confirmed its outlook for 2024, when sales are expected to increase by up to 5%.
Volkswagen faces a number of challenges, from fierce competition including new rivals in its key market of China to the slow transition to costly electric vehicles.
Last year, the company announced plans for a 10 billion euro savings program to boost profitability and plans to cut jobs over the next few years.
Merck's sales fell 8%
Meanwhile, another German carmaker, Mercedes-Benz, on Tuesday announced a sharp drop in first-quarter profits as supplier problems affected sales of luxury cars.
Net profit for the first three months of this year was 24.6% lower than the same period in 2023, falling from €4 billion to €3 billion (R60 billion).
The figure was higher than the 2.8 billion euros expected by analysts compiled by financial data firm FactSet.
Sales took a hit, with first-quarter sales down 4.4% to 35.9 billion euros.
Mercedes said in a statement that its performance was boosted by “lower raw material prices and tighter cost controls” as well as strong performance in its van division.
In the first quarter, the Utility Vehicles division's revenue increased by 6% to 4.9 billion euros.
Due to this increase, the division's operating profit increased by 22.4% to €933 million, which is closely watched as an indicator of underlying performance.
However, the strong performance in the van business could not offset a difficult quarter for the group's core automotive division.
The group said first-quarter sales fell 7.5% to 25.7 billion euros, due to “supplier bottlenecks and model switching in the top segment.”
Mercedes said car sales fell 8% to just under 463,000 vehicles. This decline was matched by battery vehicles, with approximately 47,500 units sold.
Mercedes said the results reflected “solid results in all regions except Asia.”
Looking ahead, Mercedes did not change its outlook, saying it expected supply issues to ease by the end of the year.
“Sales levels in the first quarter appear to have hit rock bottom, and we expect sales volumes to improve further in the second quarter,” the group said.
Overall, Mercedes said it expects sales in 2024 to be at the same level as last year.
Additional coverage by News24
