Mercedes-Benz prepares strategy revamp after annual earnings slump

BERLIN: Mercedes-Benz has launched plans to boost returns in its car division to 10% or higher, the German luxury automaker said on Thursday, after reporting a 40.5% slump in 2024 earnings.

The carmaker, whose sales took a battering in its key markets of China and Germany last year, aims to reduce production costs by 10% by 2027 and launch dozens of models to improve its return on sales, which fell 8.1% in 2024 from 12.6% the previous year.

The company forecast a bleaker outlook for 2025, expecting adjusted returns of just 6%-8% for its car division, with group-level earnings significantly below figures from last year.

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Unit sales are projected to be lower than the 1.98 million vehicles sold in 2024, a prediction likely to disappoint investors and labour representatives, who had called for a minimum sales target of 2 million cars to fully utilize production capacity.

“To ensure the company’s future competitiveness in an uncertain world, we are taking steps to make the company faster, leaner, and stronger,” Chief Executive Ola Kaellenius said in a statement.

The company’s board will propose a dividend of 4.30 euros per share, down from 5.30 in 2023.