Porsche and Mercedes slow down

The luxury car industry has seen better days in Europe. On Friday 25 October, German carmakers Porsche and Mercedes published gloomy results. For the first nine months of the year, Porsche generated sales worth 28.56 billion euros, down 5.2% on the same period last year.

The causes include a complicated macro-economic context with ongoing conflicts, as well as rising prices for raw materials and parts supplied by subcontractors, linked to the inflationary spiral weighing on many international markets.

The shift towards electric vehicles poses a number of problems in such a fragile situation. The 27% fall in profits in the first nine months of 2024 has led Porsche's management to maintain conventional engines in order to reduce investment costs. The timeframe for achieving the ‘all-electric’ objective will have to be further extended. 

The same can be said of Mercedes, whose results for the last quarter were disappointing. The manufacturer posted sales of 34.53 billion euros, down -6.7% on the same period last year. Net profit came to €1.72 billion, marking a staggering fall of 53.8% compared with the third quarter of 2023. The decline also affected the number of vehicles delivered, down by 3%, while sales of luxury models fell by 12%. Forecasts for the end of the year must therefore be revised downwards, and Mercedes managers already know that the figures will be lower than the 153.22 billion euros in sales recorded in 2023.

Harald Wilhelm, Chief Financial Officer of Mercedes-Benz, said in a press release: “The Q3 results do not meet our ambitions in a difficult environment with fierce competition, particularly in China.” Chinese manufacturers and their aggressive competitive strategies, as mentioned by Wilhem, are leading to fears that the European car market will be weakened.

Their models are increasingly powerful and offer a wide range of options, comparable to those of top-of-the-range European vehicles. The arguments put forward by Chinese car manufacturers to attract Western customers are numerous. In China, BYD Auto has tripled the market share of its luxury cars in just two years and is now targeting the European market. It is turning to the institutions for protection: higher customs duties are to be introduced by the EU in order to rebalance trade relations between China and Europe.