Mercedes-Benz expects sales to be steady in fourth quarter despite chip crisis

Mercedes-Benz is expecting its sales to stabilise in the fourth quarter and is aiming to generate double-digit returns this year despite disruptions from the ongoing global semiconductor shortage, Bloomberg reported.

Though the chip supply shortage has gotten worse by recent factory shutdowns in Malaysia, Daimler chief financial officer Harald Wilhelm said in an interview that demand for Mercedes luxury cars remains strong in China, Europe and North America. “We currently anticipate a more normal sales volume in the fourth quarter, probably on the level of the first or second quarter, but still far below what we’ve previously planned for," Wilhelm was quoted in the report. The unit is still targeting an operating profit margin of between 10 per cent and 12 per cent for this year.

The CEO of the company Ola Kallenius earlier informed that the shortage will result in a significant sales decline in the current quarter and also warned about the supply issues that may not entirely disappear until next year.

While the semiconductor shortage has forced automakers to pause or reduce their production, the companies have now started to prioritising their most profitable cars. Following this move, Mercedes-Benz has reached sales margins that have not been recorded in past years. Wilhelm noted that the automaker hence intends to maintain the current level of profit even as some costs such as travel expenses are bound to increase once the pandemic eases.

Kallenius also informed that the brand made progress in lowering the break-even point. “We have the firm intention to keep our focus on cost discipline and prove that we can sustain the current margin level," he added.