Mercedes sees order book supporting sales in slowing economy

Mercedes-Benz said its order backlog will support sales in the coming months in a subdued global economy where demand in Europe is falling behind strong US and Chinese markets.

The luxury carmaker, which has been focusing on selling more of its higher-end cars, expects carmaking margins at the upper end of its forecast range, it said on Friday. Mercedes has forecast a return between 12 per cent and 14 per cent this year, down from 14.6 per cent in 2022.

“Our focus on top-end cars and premium vans has made Mercedes-Benz more weatherproof, allowing us to accelerate our digital and electric transformation — even in a period of economic uncertainty,” said chief financial officer Harald Wilhelm in a statement on the company’s full first-quarter earnings release.

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Carmakers are holding up well in a slowing environment so far, feeding off full order books after lengthy supply-chain problems choked production. Mercedes is moving its model line-up further upmarket to better weather downturns with more affluent people less affected by factors like high-interest rates and inflation.

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Demand in Europe has remained sluggish during the first quarter with strong orders in China and the US on “a good level”, said Mercedes.

Adding to the mix, Tesla this year intensified vehicle price cuts across its model range, fuelling concerns for slimmer returns, particularly in the mid-range electric vehicle market.

Mercedes last week released preliminary earnings showing a 14.8 per cent return on carmaking sales in the first quarter, topping analyst estimates. — Bloomberg