Mercedes-Benz has more advantages than its main competitors

Stuttgart carmaker Mercedes-Benz was more profitable last year than any of its competitors. This is what business consultant EY reports. For every 100 euros that the group earned, the equivalent of 12.80 euros remained in operating profit, from which taxes and interest have not yet been deducted. This means that Mercedes-Benz has a so-called EBIT rate of 12.8 percent, which represents a decrease compared to the previous year.

At this year’s press conference in February, the group announced that it expected fewer sales of electric vehicles:

At Tesla there is less profit left from sales than in 2022

According to the analysis, Opel’s parent company Stellantis achieved an EBIT rate of 12.1 percent in 2023 and ranked second. At BMW, out of every 100 euros earned through car sales, the equivalent of 11.90 euros remained in operating profit, i.e. 11.9 percent. American carmaker Tesla recorded the biggest drop in 2023: The electric carmaker’s profit margin fell from 16.8 percent to 9.2 percent compared to the previous year. Instead of 16.80 euros, Tesla had only 9.20 euros per 100 euros in sales. This puts Tesla in the middle of the pack. The Volkswagen Group ranked tenth. The American car manufacturer Ford came last.

According to EY, the current multi-billion dollar auto industry’s profits come from sales of internal combustion engine models. It will be a long time before the industry makes real money with electric cars. “Last year, the industry was able to benefit from higher new car prices and renewed capacity,” said the consulting firm. However, the problems facing the sector have become increasingly clear.

The car industry is selling less than before the pandemic

One of the problems is that car manufacturers are selling less than before the corona crisis. The industry can produce more than it can sell now. But according to EY, this so-called overcapacity causes problems for the group as well as for its suppliers. Consumers could benefit from this because automakers can offer discounts to get rid of their end-of-life vehicles, EY estimates: “Competition will once again be based on price.”

In addition to great potential, what is also causing problems for the automotive industry is the decline in electric vehicles, according to EY. Manufacturers have invested billions and assumed that the demand for electric cars would increase quickly. But now doubts are growing, says the business consultancy – “in politics, in industry and among customers”. Mercedes-Benz, for example, assumes that fewer pure electric or hybrid cars will be sold in the next few years than previously thought. If demand is sufficient, every second Mercedes-Benz car sold will be an electric or hybrid car by 2030.