German carmaker Mercedes-Benz said Thursday it would focus more on high luxury vehicles in the hope of boosting profit margins. Luxury had “always been the core of our brand” and would become the cornerstone of the manufacturer’s strategy, Mercedes-Benz CEO Ola Kallenius said in a statement. The group said it will commit 75 percent of its investments to the top two-thirds of its product range. Mercedes aimed to increase by 60 percent the share of its sales from the upper tier “Top-End Luxury” autos.
With the renewed focus and more “limited edition” models, Mercedes is aiming to boost its profit margins. The Stuttgart-based manufacturer is targeting margins of 14 percent “in favourable market conditions” and 12 percent “in fair market conditions” by the middle of the decade. Greater headwinds would see the figure drop between 8 and 10 percent. The group is looking to double-down on recent developments that have seen it benefit from rising prices for luxury models as component shortages have limited supply of cars.
In the first quarter of this year, sales fell by 10 percent on the same period last year, while its net profit increased by 3 percent to 3.6 billion euros ($3.8 billion) supported by sales of top-of-the-range vehicles. Between January and March this year, Mercedes’s profit margin sat at 16.4 percent.
The group is still aiming for its fleet to be completely electric “wherever market conditions allow” by 2030. In its mid-range “Core Luxury” segment, Mercedes would develop add a “further model” for the Chinese market. “China is important for this growth strategy but it is not the only growth market,” Kallenius told a press conference.
Even in Europe, where the number of cars was expected to remain stable, Mercedes saw an increasing number of “clients for premium and luxury offerings”, Kallenius said.
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