Mercedes-Benz shares fall after management's cautious outlook: tough competition and rising costs are weighing on the auto division.

Mercedes-Benz shares fall after management's cautious outlook: tough competition and rising costs are weighing on the auto division.

Mercedes-Benz management has revised its forecast for the full year due to the tough competitive situation, parts shortages and rising costs. As a result, the share fell below the 60 euro mark. The return on sales in the automotive business, adjusted for special effects, is now expected to be in the lower range of the forecast range of 12 to 14 percent. CFO Harald Wilhelm also stated that price competition for electric vehicles was “brutal”. Falling demand for premium brands such as Mercedes and Porsche suggests luxury buyers are also becoming more cautious as inflation remains high despite the rise in interest rates.
According to an analysis by JPMorgan analyst Jose Asumendi, profit estimates for 2023 and 2024 were reduced to reflect higher supplier compensation compared to last year. RBC analyst Tom Narayan also criticized the fact that the car manufacturer had not met expectations regarding sales and adjusted operating results. The company also expects a margin in the lower range of the previous target range for 2023. Warburg Research analyst Marc-Rene Tonn also warns about the outlook and emphasizes that the final quarter is particularly important.
Even with its quarterly figures and rising margins, Mercedes has repeatedly positively surprised analysts and investors. The current numbers now signal normalization. Nevertheless, it will depend on how the margin in the car division and the average sales price per vehicle develop in the last quarter. In recent years, Mercedes has been able to increase the sales price per car from 51,000 euros in 2019 to 72,000 euros in 2022. Although Mercedes-Benz's luxury strategy makes it less vulnerable to competition than Volkswagen, the company will feel the effects of growing competition from China in the medium to long term. Nevertheless, Mercedes is well positioned for the future with the MMA modular system and the new CLA. From a technical point of view, however, the stock's chart image is burdened. The supports at 64.28 euros and 62.50 euros as well as the support zone between 61.80 euros and 60.50 euros could not hold. The share is now expected to bottom between EUR 57.50 and EUR 55.50.
Source: According to a report from www.deraktionaer.de.