Porsche and Mercedes-Benz plan cost cuts amid weak car demand
Porsche and Mercedes-Benz are gearing up to take cost-cutting measures after a sharp decline in demand for their luxury vehicles in China. The decline has led to a drop in profits for both companies. Porsche is now re-evaluating its model range after witnessing a decline in sales and earnings, in the first three quarters of this year.
Mercedes-Benz reports lowest automaking margin in 3 years
Mercedes-Benz has reported its lowest carmaking margin in nearly three years, owing to a drop in sales of high-end models such as the S-Class limousine. The company's key profitability indicator fell to 4.7% in Q3, missing its minimum target of 8%. This is the lowest level since the brand separated from its truck business in late 2021.
Porsche's vehicle deliveries in China hit decade low
Porsche's vehicle deliveries in China have fallen to their lowest level in a decade during Q3. However, the company continues to remain optimistic about its full-year guidance, hoping for a recovery in demand toward the end of the year. This optimism comes after Porsche lowered its outlook in July, projecting a return on sales as high as 15%.
German automakers face challenges
The economic slowdown in China has hit German automakers hard, with a decline in luxury spending hitting orders for Porsches and Mercedes-Benz's high-end S-Class and Maybach models. The downturn has already forced Mercedes-Benz to lower its 2024 sales outlook, and cut adjusted profit margins for its car unit. Porsche plans to lower costs by downsizing its dealer network in China, and cutting research and development expenses.
Mercedes-Benz's Q3 profits halve due to weak Chinese market
Mercedes-Benz has reported a 50% decrease in Q3 profits. The company's net profit stood at €1.72 billion, down from €3.7 billion a year ago, while sales fell nearly 7% to €34.5 billion. Vehicle deliveries also fell by 3%, mainly due to a 13% drop in China. Sales of its most profitable luxury cars worldwide fell by 12%.
