Investing.com -- Mercedes Benz Group (ETR:MBGn) has reported a sharp fall in first-quarter income, as the German luxury automaker was hit by a fall in sales volumes and higher expenses at its key cars division.
Along with changeovers of its top-end models and supply-chain bottlenecks, Mercedes has been facing an industry-wide slowdown in the adoption of pricier electric vehicles by cost-conscious customers. However, unlike rivals such as EV giant Tesla (NASDAQ:TSLA) and China's BYD (SZ:002594), the firm has so far chosen not to reduce product prices to help bolster waning demand.
"Overall, pricing remained at a high level in [the first quarter]," Mercedes said in a statement on Tuesday.
Unit sales at the cars division during the three-month period fell by 8% to 462,978, with volumes of hybrid and fully-electric cars sliding by 1.7% and 8%, respectively. Revenue slipped by 7.5% versus the year ago period to 25.71 billion euros, while the return on sales dropped to 9.6% from 14.9%.
Despite strength at its vans and mobility segments and "solid" free cash flow, Mercedes' group-wide adjusted earnings before interest and taxes slumped by 33.6% to 3.6 billion euros, missing consensus estimates.
Mercedes flagged that the economic situation and automotive markets continue to be "characterized by a degree of uncertainty," although sales are expected to pick up in the coming quarters and some supply constraints are seen easing.
"Sales levels in the first quarter are seen as the trough, with second quarter volumes expected to be better," it added.
The company confirmed its full-year guidance for total revenue in line with the prior year and group earnings before interest and taxes slightly below 2023 levels.
In a note to clients, analysts at UBS called the guidance commentary "reassuring" and should limit downward pressure on Mercedes' stock price. Shares in Mercedes were lower by over 4% in mid-morning European trading.