FRANKFURT (Reuters) – Mercedes-Benz will lower mid-term profitability targets for its passenger car business due to prolonged market weakness and the shift to electric vehicles, a source familiar with the matter told Reuters on Tuesday.
The German premium automaker's management board, led by CEO Ola Kaellenius, will revise down the targets it set in 2022 by February 20, when the company plans to hold its capital markets day, the source said.
In the best-case scenario, Mercedes will aim for profitability in the double-digit range, the source added.
Three years ago, Mercedes said it expected an adjusted profit margin of up to 14% in positive market conditions and of no less than 8% in tougher times.
Business daily Handelsblatt reported the plans to revise the guidelines.
Mercedes, which is increasing cuts at the company after a weak third quarter, confirmed that a capital markets day with analysts is planned for February 20, alongside the release of annual results. A spokesman said the company would also confirm its medium-term targets.
In 2022, Mercedes posted earnings above target of 14.6%, boosted by strong demand during the COVID-19 pandemic. Since then, profitability in its core passenger car business has been slipping.
(Reporting by Ilona Wissenbach, writing by Rachel More, editing by Thomas Seythal)