Mercedes-Benz (OTC:MBGAF) released the company’s 3Q earnings results Thursday morning, reporting a 12.4% adjusted return on sales in its cars division. EBIT across the group fell 6.8% to 4.8 billion euros ($5.1B), slightly above consensus.
The company said that a “brutal” EV market, plagued by heavy price cuts and supply chain issues, meant that the carmaker would likely hit the lower end of its 12-14% adjusted return on sales forecast for their cars division.
However, the CFO, Harald Wilhelm said that the automaker remains committed to its EV targets, though they may be able to pad their earnings with better returns from its internal combustion engine (ICE) portfolio if margins on EVs remained lower than previously assumed.
With some traditional OEMs selling EVs below the level of ICE cars despite their higher production costs, "this is a pretty brutal space," said Wilhelm.
"I can hardly imagine the current status quo is fully sustainable for everybody," he added.
Earlier in the month, Mercedes-Benz revealed a 4% decline in its total third-quarter sales, where high-end sales experienced an 11% drop, attributed in part to ongoing model transitions and a scarcity of 48-volt systems sourced from Bosch.
The company noted a 3.8% decrease in car revenue owing to the decline in deliveries, but clarified that the average selling price remained steady.
In terms of future projections, Mercedes-Benz foresees a continuation of the current sales rate from the preceding three quarters into the fourth quarter. Additionally, the company chose not to revise its full-year sales target, maintaining the expectation of no year-on-year change.