Mercedes faces weak sales amid China competition and EV struggles

Mercedes has recently revised its profit forecast for 2024, lowering it to a range of 7.5 to 8.5%, down from a previous expectation of up to 11%. This adjustment follows a similar move by BMW, which cut its profit forecast to as low as 6%. The German automotive industry is facing significant challenges, including a weakening European market, increased competition from Chinese manufacturers, and difficulties in the electric vehicle (EV) sector. The competition in China is particularly fierce, with over 7 million EVs expected to be sold in the country this year, compared to just 1.3 million in Europe. This disparity gives Chinese EV makers a substantial cost advantage, complicating the landscape for traditional German automakers. Analysts have noted that the current economic conditions in China do not suggest a quick recovery, further straining the market. Investment researchers have pointed out that the scale of the profit forecast cuts was unexpected, indicating deeper issues within the industry. Experts suggest that German manufacturers must make strategic decisions to remain competitive, including increasing investments in China to enhance development and production capabilities for electric vehicles. The consensus among analysts is that greater cooperation with Chinese suppliers and manufacturers is essential for German automakers to regain lost ground in the rapidly evolving automotive market. Without these changes, the outlook for companies like Mercedes remains challenging as they navigate a complex and competitive environment.