Mercedes-Benz’s third-quarter earnings have suffered a significant downturn, prompting renewed scrutiny over the automaker’s ambitious restructuring plans and their potential impact on future profitability. The company reported a consolidated profit of €1.19 billion, a considerable drop from the €1.719 billion recorded in the same period last year.
While CEO Ola Källenius framed the results as “in line with our full-year forecast” and highlighted the commencement of what he described as the company’s “largest product and technology offensive in history” analysts are questioning the sustainability of the strategy given the accelerating decline in profit margins.
The adjusted EBIT for the Mercedes-Benz Group amounted to €2.099 billion, a decrease from the €2.537 billion achieved in the third quarter of 2023. The company attributed the downturn largely to lower sales volumes and increased expenses related to tariffs and currency fluctuations.
Critically, the reported figures were significantly impacted by one-time effects, with approximately €1.349 billion in adjustments. A substantial portion – €876 million – stemmed from a large-scale personnel reduction program in Germany and overseas “optimization programs”. These measures raise concerns about potential long-term consequences for employee morale and the potential loss of institutional knowledge within the organization, potentially hindering innovation.
The reliance on these substantial one-time gains to maintain the appearance of stability is drawing criticism. Some political commentators are already questioning whether the aggressive cost-cutting measures are a genuine reflection of underlying business performance or a desperate attempt to mask deeper structural issues within the corporation and the broader German automotive industry, which is facing increasing pressure from electric vehicle competition and changing consumer demands. The company’s unwavering adherence to a full-year forecast, despite these worrying trends, also reinforces doubts amongst investors. The coming months will be crucial in determining whether Mercedes-Benz can successfully navigate these challenges and restore investor confidence.
