Car sector under pressure, Mercedes thud in Frankfurt weighs heavily

(Il Sole 24 Ore Radiocor) - MercedesBenz is sounding the alarm over the 2024 numbers and triggering a wave of selling across the entire auto sector and also the luxury sector in general. As a result, the Stuttgart-based carmaker's stocks have plunged as much as eight per cent, while those of competitor Bmw and Volkswagen lose as much as four points. Renault and Stellantis also marked the pace. The latter lost 50% of their value from the highs of the end of March touched in the EUR 27 area.

The German premium car manufacturer has revised its year-end margin targets downwards. This is the second time this has happened during 2024. In detail the operating margin is now seen between 7.5 and 8.5 per cent instead of between 10 and 11 per cent, as indicated at the release of the second quarter numbers, when the first cut in estimates was announced. The macro environment, and especially the slowdown in demand in China, is weighing heavily.

"The second half of the year will also be affected by devaluations of certain assets," the group's press release states, although it does not specify what these will be. The automotive division's operating margin is expected to be around 6% in the second half of the year and is now in freefall from the levels at which it stood only two years ago, at almost 15% (exactly 14.6%). The operating result of the group, which also has a vans division and a bank, 'should be significantly lower than in 2023', the company said. Last year it stood at 20 billion, on a total turnover of 1153.2 billion.