Mercedes-Benz to keep margin target of 10 percent, says Daimler CEO

A long-term EBIT profit margin target of 10% for the Mercedes-Benz Cars division remains “realistic,” according to Daimler AG CEO Dieter Zetsche. He says however that it is unclear when the company will reach it. He explains that since the environment is unclear as well, it would be dishonest to name a date.

The two challenges that the company is facing are said to be the economic crisis and the costs to prepare for a CO2-free world. Although vehicle sales at Mercedes-Benz Cars dropped 13.2% in August, higher unit sales are expected at the division in the next months. When asked about the issue on the two sides’ reluctance to work together, Zetsche responded, “This is a wrong impression. We are cooperating much more … than noticed by the public.”
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Joe_Limon - 9/23/2009 1:52:03 PM

+2 Boost

10% is a good number. You can feel good about purchasing a quality product without having to be raped at Porsche's near 30% logo fee.

GermanNut - 9/23/2009 1:56:50 PM

0 Boost

I highly doubt Mercedes-Benz Cars will be able to reach a profit margin of 10% for another year at minimum for three reasons:

1) Daimler AG, owner of Mercedes-Benz, has lost over $ 2 billion in just the first half of 2009.

2) Global sales at Mercedes-Benz have fallen 18% on the year

3) In the United States, one of Mercedes' largest global markets, sales have crumbled, falling 20% +.

I don't see how you can reach a profit margin of 10% in the next year unless the economic recovery in the United States takes off faster than ever, which we don't expect to happen.

This global economic recovery will be a slow one because the consumer is still reluctant to spend, especially on big-ticket items like a Mercedes-Benz car.

If Mercedes-Benz sold more cars in China this goal might be realistically attainable in one year. Unfortunately, Mercedes-Benz's sales pale in comparison to Audi's in the world's largest car market by annual sales, which also happens to be experiencing rapid growth currently.

Yonder7 - 9/23/2009 4:30:42 PM

0 Boost

GermanNut: I agree with you but partialy. China is the market that is allowing most of luxo companies to stay alive. At this moment there are companies that will have to asume errors in marketing as BMW with X6 and 5GT or 3GTs....those will be very expensive and and the world is not willing to spend such amount of money in ugly cars....So BMW spend a lot of money to develop those cars and won't be able to get revenues from them...that goes for the R class, but even the R class have a better market than the X6. Audi is doing great cause they are creating, atractive cars (which is the main reason to buy fro most of the people) and reasonable prices. Audi is in the right path. The time will tell us who's right....for now and the numbers, The X6 is a failure....let see the 5GTs....I predict that the A5 hatchback will be a hit in Europe and Latin America....and they will end exporting it to USA if they improve the security for side impacts. MB is restraining expenses on expensive cars....The only thing that I see as a failure from them is the SLS...Ugly...good performer but again ugly and too expensive but I am not sure cause the BRAND is so loved, that presentation of that pig was a success http://jalopnik.com/5364713/mad-about-the-mercedes+benz-sls-amg ..and well, is directed to a very exlusive market that have the money to buy it. I recognize that for a "sport car" 3500 pounds is too heavy but also I asume that that is the reason cause the SLR was able wipeout 4 cars and the owner got out alive in the poland accident few days ago:
http://jalopnik.com/5364443/mclaren-slr-crashes-destroys-surrounding-cars-in-ferrari-street-race/gallery/ We have to see cause after Cash for Clunkers.....sales will stay down for a long time.