By Kim Richters
Mercedes-Benz Group AG raised some mid-term margin targets as it updated its strategy as a standalone car maker after separating from its commercial-vehicles business last year and said it plans to increase its share of top-end vehicles.
The German luxury auto maker said Thursday that it is targeting an operating margin of around 10% in unfavorable market conditions and around 12% in fair conditions by 2025. It had previously guided for a mid- to high-single-digit margin in unfavorable and high-single-digit margin in fair conditions.
In a favorable market environment, Mercedes-Benz now aims for an operating margin of around 14% by 2025 compared with its previous guidance of a double-digit. It also expects a margin of around 8% in the case of very unfavorable conditions.
In 2021, the company's cars and vans business reported a margin of 12.4%.
Like its peers, Mercedes-Benz is facing multiple headwinds this year, including rising raw-materials costs, the continuing semiconductor shortage and other supply-chain woes related to the war in Ukraine.
"Unforeseeable geopolitical or macro-economic shifts and raw material premises obviously cannot be part of this target grid, but Mercedes-Benz is redesigning the company to ensure stronger profitability even in a tougher environment," said the company.
At the strategy event on Thursday, the car maker said it wants to use more than 75% of its investments to make products for the most profitable market segments and increase the sales share for top-end vehicles by around 60% by 2026 compared with levels in 2019. In 2019, Mercedes-Benz sold around 250,000 top-end vehicles, a sales share of around 11% that year.
Mercedes-Benz also confirmed plans to become fully electric by 2030 where market conditions allow and become carbon-neutral by 2039.
Write to Kim Richters at firstname.lastname@example.org
(END) Dow Jones Newswires
May 19, 2022 07:15 ET (11:15 GMT)Copyright (c) 2022 Dow Jones & Company, Inc.