Record Sales, Lackluster Earnings As Mercedes-Benz Shoves Cash Into Evs

Steph Willems
by Steph Willems
record sales lackluster earnings as mercedes benz shoves cash into evs

Mercedes-Benz sold a record 2,385,400 passenger vehicles around the globe in 2019, topping the previous year’s tally by some 3,400 units, and subsequently brought in more money while doing it. Revenue rose 3 percent, the automaker said in its end-of-year earnings report, but that intake didn’t translate into more profit.

Far from it.

As the automaker embarks on a cost-cutting campaign aimed at freeing up cash for electric vehicle development, among other things, the German manufacturer announced its net profit dropped to $2.95 billion from $8.29 billion in 2018. As a result, shareholders can expect a paltry dividend payout.

“While our results in 2019 reflect ongoing strong customer demand for our attractive products, we cannot be satisfied with our bottom line. Above all, material adjustments affected our financial results last year,” said Ola Källenius, board of management chairman for Daimler AG and Mercedes-Benz, in a statement.

“The future of the Daimler Group lies in CO2-neutral mobility as well as in consistent digitization, leveraging its full potential in our products and our processes,” he continued. “To achieve that, we have substantially ramped up our investments into new technologies. We are determined to materialize our technological leadership and at the same time to significantly improve profitability. To this end, measures to cut costs and to increase cash flows are necessary.”

A German newspaper reported yesterday that the automaker may cut up to 15,000 jobs in an push to streamline its business. Daimler is not alone in its efforts, though European manufacturers face the most immediate threat to their bottom line, given the EU’s new emissions standard — and the rush into electrification that sprung up in its wake.

Now, about that dividend. The price of going green amounts to 98 cents per share — that’s the payout proposed by the automaker’s supervisory and management boards at its annual general meeting, slated for April 1st. The previous year’s dividend was $3.55.

Total payout will amount to $1.09 billion, down significantly from 2018’s $3.82 billion.

While the automaker predicts continued growth in demand for premium vehicles (unlike mainstream cars), the need to purge its fleet of carbon dioxide emissions will carry a steep price tag. Hence the cost-cutting.

“Those measures include the significant reduction of material and administrative costs and the reduction of personnel costs by more than €1.4 billion by the end of 2022,” the automaker stated. “The aim is to cut jobs worldwide in a socially responsible manner, including the reduction of management positions.”

As for product, Mercedes-Benz plans to launch a small electric crossover, the EQA, this fall, joined by the EQV electric van. There’s also a next-generation S-Class on the way. Plug-in hybrids and 48-volt mild hybrids will proliferate throughout the model range, Mercedes-Benz said, as it seeks to quadruple sales of PHEVs and EVs in the current year.

[Image: Murilee Martin/TTAC]

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  • ThomasSchiffer ThomasSchiffer on Feb 11, 2020

    The problem I see with EVs is that their much proclaimed ‘advantages’ offer no real-world value to many motorists. Most drivers want to get from A to B and eventually from B to C and C to F and from F to X as soon as possible and as comfortably as possible. Part of my definition and expectation of comfort is rapid refueling and long range; and the range must be stable and/or at least come close to or exceed the manufacturer’s claim. Most current EVs fail to deliver in this regard, and their range is dependent on many uncontrollable factors such as weather conditions, temperatures, battery wear and much more. I do not care about the propaganda which the EUSSR tells me about EVs. The claimed ‘advantages’ are not advantages to my daily driving requirements. I do not care about emissions or quietness as my car(s) are clean enough and quiet enough. What good is rapid, neck-snapping acceleration? An EV, at least in its current form, offers no real-world benefits to me. A vehicle with an internal combustion engine, particularly a diesel, does.

    • MBella MBella on Feb 11, 2020

      At the end of day they make great second vehicles for most households. They can work as primary vehicles for some, but the average buyer just doesn't want to put up with some of the compromises. The buyer that wants to show off that he's saving the world is buying a Tesla. There's no more room for anyone else.

  • Orangedude71 Orangedude71 on Feb 12, 2020

    benz driver here.. general observation; maybe if they didn't need to spend a fortune warrantying their cars they could make a decent profit. Il bet mine has at least 7k in warranty repairs on a 50k car. And the receiving lanes at the local dealer are jammed with people dropping off for warranty work as well.. fix your quality before you lay of 15k people

  • SCE to AUX I charge at home 99% of the time, on a Level 2 charger I installed myself in 2012 for my Leaf. My house is 1967, 150-Amp service, gas dryer and furnace; everything else is electric with no problems. I switched from gas HW to electric HW last year, when my 18-year-old tank finally failed.I charge at a for-pay station maybe a couple times a year.I don't travel more than an hour each way in my Ioniq 1 EV, so I don't deal much with public chargers. Despite a big electric rate increase this year, my car remains ridiculously cheap to operate.
  • ToolGuy 38:25 to 45:40 -- Let's all wait around for the stupid ugly helicopter. 😉The wheels and tires are cool, as in a) carbon fiber is a structural element not decoration and b) they have some sidewall.Also like the automatic fuel adjustment (gasoline vs. ethanol).(Anyone know why it's more powerful on E85? Huh? Huh?)
  • Ja-GTI So, seems like you have to own a house before you can own a BEV.
  • Kwik_Shift Good thing for fossil fuels to keep the EVs going.
  • Carlson Fan Meh, never cared for this car because I was never a big fan of the Gen 1 Camaro. The Gen 1 Firebird looked better inside and out and you could get it with the 400.The Gen 2 for my eyes was peak Camaro as far as styling w/those sexy split bumpers! They should have modeled the 6th Gen after that.