Germany’s Mercedes-Benz lowers forecast due to weakness in China

German high-end carmaker Mercedes-Benz on Thursday lowered its guidance for the 2024 financial year, citing a deterioration of its business in China.

According to German news agency (dpa), the company now expects annual earnings before interest and taxes (EBIT) to be significantly below the prior year’s level, whereas it had previously anticipated a slight decline compared to the prior year.

According to the Stuttgart-based firm, China’s gross domestic product growth has lost further momentum due to weaker consumption and an ongoing downturn in the real estate sector.

This decline has impacted overall sales volume in China, including the Top-End segment. As a result, the sales mix for the second half of 2024 is anticipated to remain consistent with the first half, but weaker than originally projected.

Additionally, the second half of 2024 is expected to face various valuation adjustments, and the dynamic pricing environment is likely to persist.

Consequently, Mercedes-Benz Group has revised its full-year outlook.

Mercedes-Benz Cars now expects annual adjusted Return on Sales to be between 7.5% and 8.5% compared to the prior outlook of 10% to 11%. The free cash flow of the industrial business is now expected to be significantly below the prior year’s level, compared to the previous expectation of a slight decline.