Mercedes-Benz is looking to cut costs and will do so with a new direct sales model
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by Brad Anderson
February 20, 2023 at 04:47
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by Brad Anderson
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Mercedes-Benz foresees 2023 being a challenging one, stating that earnings could drop because of economic uncertainty around the world.
While the company expects sales in 2023 to remain steady from last year, it expects to see a lower adjusted return of 12-14 per cent on sales for its cars division. Mercedes-Benz’s chief financial officer Harald Wilhelm said its top priority this year will be balancing price and volume.
Key factors expected to influence Mercedes-Benz throughout the year include sluggish demand in Europe, high energy and raw material costs, inflationary pressures, and a slow relaxation of coronavirus restrictions throughout China.
Mercedes-Benz will also continue to look for ways to cut costs throughout 2023, continuing a pledge from 2020 that it would aim to cut fixed costs, capital expenditure, and research and development spending by more than 20 per cent by 2025 from 2019 levels.
A key way that Mercedes-Benz will be able to cut costs is by shifting to a direct sales model in various markets throughout Europe. The company is already doing so in markets including Great Britain and Germany.
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“You turn yourself from a wholesaler into a retailer,” Mercedes chief executive Ola Kallenius said of the move. “It changes your whole attitude in how you run the business.”
Germany’s auto association believes that 74 million cars will be sold globally this year. This will represent a 4 per cent increase from last year but will still be down 8 per cent from pre-pandemic levels, Reuters reports.
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