Mercedes-Benz AG expects profitability at its main vehicles division to slip this year as the German manufacturer sees more drag from supply chain snarls and a surge in raw material costs, it said yesterday.
The automaker forecasts returns for its vehicles unit of 11.5 to 13 percent, slightly lower than last year’s 13.1 percent, when it swung production to its most profitable models.
The semiconductor shortage that has plagued manufacturers globally would remain a hurdle even as the crunch eases somewhat, Mercedes said.
Photo: Reuters
Vehicle prices would continue to rise, but “will not fully offset the raw material headwinds which are expected to increase this year compared with last year,” the company said in a statement.
Chief executive officer Ola Kallenius is intensifying efforts to transform one of the most storied automakers into an electric vehicle producer that can challenge Tesla Inc.
The company aims to have battery-powered models in all its segments this year, a staging post for its ambition to sell only electric vehicles by 2030.
Mercedes has had more trouble sourcing chips than BMW AG, which last year outsold its rival for the first time since 2015 by better navigating the bottleneck that has hampered global auto production.
While the manufacturer said it expects the chip crunch to stabilize this year, it did not say when it sees the shortage ending.
Sales of higher-priced vehicles including the Maybach luxury sedans, AMG performance models and larger sport utility vehicles helped the company bolster profitability last year despite production outages.
The company said it expects to sell “slightly more” vehicles this year.
Mercedes proposed a dividend of 5 euros (US$5.62) per share, more than triple the 1.35 euros per share last year.
The company formerly known as Daimler AG spun off its truck division in December last year, ending more than a century of the businesses running under one roof. The move was intended to allow the companies to better focus on preparing for the industry’s sweeping technology shifts.
Separately, Stellantis NV expects to deliver another year of double-digit percentage returns this year by overcoming past supply snarls and labor shortages with production of more profitable vehicles.
Focusing assembly lines on higher-end models helped boost the Jeep, Ram and Peugeot maker’s adjusted operating income margin to 11.8 percent last year, comfortably exceeding its forecast for about 10 percent, Stellantis said on Wednesday.
The manufacturer also announced a total dividend payout of 3.3 billion euros for the first year of operations following the merger of PSA Group and Fiat Chrysler.
Stellantis expects a gradual improvement in chip supplies in the second half of this year, chief financial officer Richard Palmer told reporters in a conference call.
“Clearly semiconductor availability continues to be an issue for the industry,” he said.
The lack of the components led to lost output of about 1.7 million vehicles last year, or one-fifth of planned production, he added.
Semiconductors are not the only challenge. Cost inflation on raw materials such as steel and other metals, along with a tight labor market in North America would also weigh on operations, Palmer said.
“We’re still seeing some elevated levels of absenteeism, more in North America than in Europe, which is hurting our supply base to meet production,” he said. “The biggest issue for 2022 continues to be supply volatility and inflation.”
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