Despite a solid quarter financially, thanks to the company’s ability to raise prices in key markets, Mercedes-Benz Group AG acknowledged its operations are facing serious difficulties due the disruptions created by the war in Ukraine.
“The team at Mercedes-Benz delivered another strong quarter in an uncertain environment,” said Ola Källenius, chief executive officer of Mercedes-Benz Group AG.
“We are enhancing our vigilance and resilience to manage increasingly complex macroeconomic and geopolitical challenges. At the same time, we have good reasons to remain confident, with ongoing strong demand, a fresh vehicle portfolio and further key product launches this year.”
By the numbers
The adjusted return on sales at Mercedes-Benz Cars rose to 14.2% in the quarter and reached 10.1% at Mercedes-Benz Vans, despite the COVID lockdowns in China, the ongoing semiconductor supply-chain bottlenecks and the war in Ukraine.
Mercedes-Benz’s revenue rose 7% to $37.1 billion and adjusted EBIT increased 8% to $5 billion as the company’s focus on top-end luxury vehicles, battery-electric vehicles and premium vans as well as an ongoing focus on costs, helped to offset lower sales and higher raw material costs, the German automaker said.
Supply chain woes mount
Mercedes-Benz noted in the press release accompanying the quarterly financial report, the heightened geopolitical tensions following Russia’s attack on Ukraine, forced Mercedes-Benz to safeguard its supply chain and maximize the potential for reducing or substituting the use of natural gas in vehicle production.
“For example, Mercedes-Benz has established that in Sindelfingen, where the EQS, S-Class and Mercedes-Maybach are produced, the paint shop could operate without gas supply in an emergency mode. Mercedes-Benz sees a gas reduction potential of around 50% in Germany without impact if regional pooling is possible. The company’s long-term goal is to switch from gas to electricity and other renewable energy sources,” the release noted.
Suppliers critical to the automakers also are threatened by the cuts in energy supplied by Russia, which, prior to the start of the war in Ukraine, was the major source of crude oil and natural gas to the European Union.
More changes
Ford Motor Co. said it identified 550 suppliers located in Central Europe who could be vulnerable to the shutdown or cuts in deliveries of natural gas from Russia. The Ford list included 130 companies that make parts not only for Ford of Europe but also for Ford’s operations in North America.
In addition to making Mercedes-Benz “more weatherproof against geopolitical and macroeconomic headwinds,” Källenius said, the company continues to transform at full speed towards an all-electric future.
For example: in June, the Mercedes-Benz Vision EQXX beat its own efficiency record and drove more than 1,200 kilometers on a single charge under real-world conditions. The EQS SUV was presented and the EQE was launched in the market. And that’s after Mercedes-Benz, in consultation with its employee representatives, re-calibrated its European production network for passenger cars to manufacture its reshaped product portfolio focused on luxury electric vehicles, he noted.