By on February 11, 2020

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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20 Comments on “Record Sales, Lackluster Earnings As Mercedes-Benz Shoves Cash Into Evs...”

  • avatar

    I think, all these luxo makers banging into EV will end up with ultra-competitive market of expensive cars where no one will make any $$

  • avatar

    Of all the automakers I think MB has the biggest tradition barrier to overcome with their consumers and marketing EVs.

    You don’t buy a MB to save a dime or blast off from a stop light. But there is a strong case to be made that a well designed luxury yacht electric vehicle has the ability to dominate a ICE equivalent.

    The underwhelming offerings and sluggish timeline suggest this is a case of reluctant compliance.

    I say all this while MB has unarguably the most efficient and powerful Formula 1 Hybrid electric powertrain in the world…

  • avatar

    I’d take the buttery smoothness and roar of a V8 as well over any EV.

  • avatar
    R Henry

    Every posting here (and all the other places) about EV’s always results in the same, well reasoned (usually, not always) arguments for and against. I don’t think there is much more to be said. We must simply wait to see how this grand transition (or not) plays out over the next decade.

    • 0 avatar

      That’s not entirely the case. People studiously ignore the political climate that will affect availability of the fuels – oil and natural gas – needed for both ICEs and EVs: fracking.

      Without fracking, the US at least goes back to importing oil to turn into gasoline, and the price goes up dramatically. Without fracking, the surplus and low price of natural gas is gone, and there’s a huge reduction in electrical generation, now that coal has been demonized.

      The group opposed to fracking is not insignificant, and the policy they propose is a serious threat to both ICEs and EVs. That’s not even taking into account that poor people in the snow belt will freeze in the dark.

  • avatar

    If only they could make a nice C-class without all those computers, maybe I’d go for one. Then again, maybe that’s what a nice “fintail” is.

  • avatar

    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.

    • 0 avatar

      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.

  • avatar

    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

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