19 mei 2022
15:26
–
In the pursuit of higher profit margins, Mercedes-Benz will sacrifice the majority of its small models in two years’ time. The German premium brand wants to fully focus on the luxury models.
–
“In the entry-level segment, we will reduce the number of models from seven to four by 2024,” said Mercedes-Benz CEO Ola Källenius on Thursday at an investor day for the German brand.
–
Källenius did not clarify which models will disappear, but it is certain that a number of variants of the popular A and B class are involved. The aim is that the starting price for a new Mercedes-Benz
(in Germany) increases from 28,000 euros now to 33,000 euros.
–
Audi, BMW and Mercedes-Benz have introduced small entry-level models in recent decades. They helped in the battle to be the largest seller of premium cars in the world. The idea that the brands could quickly establish brand loyalty for young customers with models such as the Mercedes A, the BMW 1 and the Audi A1 also played a role.
–
Luxewinstmarges
But such models require smaller margins. In pre-corona times, Mercedes was satisfied with operating profit margins of about 10 percent. By the middle of this decade, these should structurally be between 13 and 15 percent of turnover.
–
“What has always been the core of our brand is now again the core of our strategy: the luxury segment,” said Källenius. By 2026, the group wants to achieve at least 60 percent of its turnover from the top models, such as the S-class, its electric variant EQS, SUVs such as the GLS and the two sub-brands AMG and Maybach.
–
Many automakers look at Tesla with slight envy. Not only is it leading the way in the sale of e-cars, but with a small range, it wears out 1 million cars annually at solid profit margins.
–
Källenius likes to emulate Porsche, Tesla and Ferrari, where the profit margin fluctuates around 20 percent. Higher profit margins should then translate into a higher share price for Mercedes-Benz, especially since it has spun off its truck and bus division.
–
–
©Silas Stein/dpa
–
–
chasing Audi
That limited range is in stark contrast to the German luxury brands BMW, Audi and Mercedes-Benz. They were already known for their almost endless option lists, but in recent years they have also added more and more models to their range. This makes production and sales more complex and more expensive.
–
–
