Mercedes-Benz Shares Slide as Chinese Demand Weakens

Mercedes-Benz saw its shares fall nearly 7% on Friday after lowering its full-year outlook, primarily due to a sharp decline in Chinese demand. The company now expects earnings before interest and taxes (EBIT) to be "significantly below" last year’s figures, reflecting the deteriorating business climate in China.

The carmaker highlighted that China’s GDP growth has slowed, with weaker consumption and a downturn in the real estate sector hitting vehicle sales, particularly in the high-end market. In Europe, the company is also struggling, with deliveries down 12.7% in August year-on-year, and a 3.1% decline in sales across the first eight months of 2024.

Mercedes-Benz revised its forecast for adjusted return on sales, now expecting between 7.5% and 8.5%, a significant drop from its earlier estimate of 10% to 11%. This follows a previous cut in July from an initial projection of 14% to 15%.

The broader German automotive industry is facing a tough year. BMW recently slashed its profit forecast, and Volkswagen is exploring aggressive cost-cutting measures. European automakers are grappling with sluggish demand in China, their largest market, and are struggling to capture growth in the electric vehicle (EV) sector.

Calls for government intervention are growing, as carmakers seek policy support to regain competitiveness, especially in the EV market. By 10 a.m. on Friday, Mercedes-Benz shares had dropped 7%, while BMW shares also slipped by 3%. This slump highlights the ongoing challenges for European automakers amid shifting global demand and economic pressures.