Global automobile sector woes deepened further this Friday when German auto giant Mercedes-Benz reported disappointing quarterly results. For the quarter, its profit from the car division took a deep dive by 64 per cent. Quarterly net profit for the group plunged 54 per cent to 1.7 billion euros (around Rs 15,633 crore).
China’s weakening economy prompted lower sales of luxury goods across sectors in the year. Mercedes-Benz further suffered due to tough market conditions across the world, along with mounting costs on its model revamps. The automaker recently launched the Mercedes-AMG G 63 facelift in India, starting at an ex-showroom price of Rs 3.60 crore. India is also expected to get the much-awaited Mercedes-Benz G-Class SUV later this year.
“The Q3 results do not meet our ambitions,” said Mercedes-Benz Group CFO Harald Wilhelm, “…we are taking a prudent view about market evolution going forward, and we will step up all efforts on further efficiency increases and cost improvements across the business.”
With unwhelming results and continuous cuts to the profit forecasts this quarter, the luxury carmaker joins other European peers in protesting the EU’s decision to impose a tariff on the import of China-made electric vehicles. The auto sector believes that such a move might invite retaliation and further dampen sales figures in an already tough market. “In the Chinese premium and luxury segment, many foreign manufacturers expect sales to be weaker than last year,” stated the carmaker.
Rival BMW Group’s global retail sales for the third quarter also fell 13 per cent, reflecting a 13 per cent fall in China regional sales numbers.
What will happen to the Indian auto industry?
India has recently seen a lot of activity in the automobile sector, with local players like Tata Motors and Mahindra and Mahindra ruling the roost. Given the lower compliance on international trade and more “made in India” models, China’s economic issues are not expected to impact the operational numbers of leading brands.
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Adding to it was the oversubscribed Hyundai IPO earlier in October, bolstering hopes for a more robust industry growth. However, the overall markets continue on a trip down the slide, with foreign investors exiting India. The stock sales by FIIs are offset by local investors.
“Post-COVID, India regained its pre-pandemic volumes by 2022, and 2023 has seen further growth beyond that. Many countries are still struggling to reach pre-COVID levels,” said Hyundai Motor India COO Arun Garg in a media event on Tuesday.
However, slowing sales during India’s festive season have impacted the two-wheeler market, with lacklustre earnings by market leaders Bajaj Auto and Hero MotoCorp.
