×

We've got news for you.

Register on BusinessLIVE at no cost to receive newsletters, read exclusive articles & more.
Register now
Picture: BLOOMBERG
Picture: BLOOMBERG

Mercedes-Benz on Wednesday raised its outlook, expecting more new models will keep it racing to meet demand during the rest of the year.

The carmaker pointed to “solid” orders and “healthy and high-quality” demand for vehicles such as the flagship electric EQS while reporting better-than-expected second-quarter earnings on Wednesday. A new SUV version of the model will join the line-up later in 2022 and help bring in more buyers.

“We see healthy demand across all main markets,” CEO Ola Kallenius said on a call with analysts. “Maybe it’s a result of being in the third year of artificial constraint from the semiconductor shortage.”

The world’s biggest luxury car maker now expects group profit to be slightly higher than 2021, rather than unchanged, while returns from car-making are seen at between 12% to 14%, slightly higher than before.

The shares rose 2.2% in Frankfurt trading, trimming losses so far this year to 18%.

While outlining a solid few months ahead, Mercedes chimed with other major manufacturers on concerns about high inflation, supply-chain problems and a worsening energy supply crisis in Europe. Carmakers continue to battle a dearth of chips that has led to widespread production halts. Most manufacturers are seeing signs of the logjam easing, though they’re still far from assured to procure enough of the hi-tech components. 

At Mercedes, deliveries fell 7% during the second quarter because of a lack of chips as well as other logistical challenges. 

Empty dealer lots have allowed carmakers to do away with typical heavy discounts and prices for used vehicles have also ballooned. Mercedes, like other carmakers, has prioritised production of their most lucrative models, a strategy that is also in line with the company’s shift to more high-end cars to rival electric leader Tesla.

Mercedes also has taken further steps to keep its operations running due to the threat of gas rationing in Germany after Russia’s decision to cut supplies through a key Baltic Sea pipeline have raised fears of an abrupt halt of deliveries during winter. The Sindelfingen plant, where the company makes the high-end S-class and Maybach, can now function without natural gas, a fuel typically used in the carmaker’s paint operations. 

“We can, in some circumstances, replace gas with oil, and also we’re looking at a bundle of efficiency measures,” Kallenius said in an interview with Bloomberg Television. “We’re preparing ourselves for some uncertainty, for scenarios, and trying to make our operations more resilient.”

Should gas become scarce, the company will be able to continue full operations with half of its usual supply if German authorities allow it to pool the fuel between plants in the country. That would entail giving the company credit for reducing gas usage at its Stuttgart plants, for example, and not ordering a cut in consumption at its Bremen factory, even though there’s no physical sharing of gas supplies among the facilities.

Bloomberg
More stories like this are available on bloomberg.com


subscribe

Would you like to comment on this article?
Register (it's quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.

Commenting is subject to our house rules.