Mercedes more profitable than ever amid chip shortage
Mercedes-Benz AG vehicles are more profitable than ever after the chip crisis sparked a worldwide shortage of cars, boosting the selling prices for models such as the flagship S-Class.
The automaker exceeded its profitability target last year and the return on sales in the final quarter was the highest on record, a spokesperson said on Friday.
The global dearth of high-tech components has weighed on the industry, prompting production shutdowns and backlogs. Volkswagen Group on Friday reported worldwide deliveries declined by 15% in January, and Volvo Car AB said supply chain strains will continue to disrupt deliveries this year.
Still, Mercedes-Benz — which lost the luxury -vehicle sales crown to rival BMW AG for the first time since 2015 — said lower sales volumes were more than offset by rising prices last year as the company benefited from a shortage of finished vehicles and a strategy that steered scarce chips to higher value models.
The chip shortage has led to dramatic price inversions whereby some used models cost significantly more than ordering new ones, with the latter subject to lengthy delays. Used versions of the iconic Mercedes G-Wagon are selling for around a third more than new ones in the US, according to market research firm iSeeCars.
Mercedes-Benz’s management is intensifying efforts to transform one of the most storied names in automobile manufacturing into an all-electric rival to market leader Tesla Inc. The company aims to have battery-powered models in all its segments this year, a staging post for its ambition to only sell electric cars by 2030.
The company formerly known as Daimler AG spun off its truck division in December, ending more than a century of the businesses running under one roof. The move is intended to allow the companies to intensify focus on the sweeping technology changes buffeting their respective segments.
The company said adjusted returns on sales at its cars and vans segment hit 12.7%, exceeding guidance for a result in a 10% to 12% range. Strong new and used vehicle pricing helped achieve the result, the company said.
Adjusted earnings before interest and taxes at the division came to around €14bn (roughly R251,629,772,000) for the full year. Shares gained as much as 3.4% on the news.
Mercedes-Benz said it expects the restructuring move to boost group Ebit by about €9bn to €10bn. This one-time effect has no impact on cash flow and no material impact on taxes, the automaker said, adding it would be excluded from determining the dividend to shareholders.
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