FRANKFURT (Reuters) – Mercedes-Benz will lower medium-term profitability targets for its passenger car business due to prolonged market weakness and the shift to electric vehicles, a source familiar with the matter told Reuters on Tuesday.
The German premium automaker’s board of directors, led by CEO Ola Kaellenius, will revise downward the targets it set for 2022 before Feb. 20, when the company plans to hold its capital markets day, the source said. .
In the best case scenario, Mercedes will aim for double-digit profitability, the source added.
Three years ago, Mercedes said it expected an adjusted profit margin of up to 14% in positive market conditions and no less than 8% in more difficult times.
The business daily Handelsblatt was the first to report on plans to revise forecasts downwards.
Mercedes, which is stepping up cuts at the company after a weak third quarter, confirmed that a capital markets day with analysts was planned for February 20, alongside the publication of annual results. A spokesperson said the company would also reaffirm its medium-term goals.
In 2022, Mercedes recorded an above-target profitability of 14.6%, driven by high demand during the COVID-19 pandemic. Since then, profitability in its core passenger car business has been falling.
(Reporting by Ilona Wissenbach, writing by Rachel More, editing by Thomas Seythal)