After a series of cost reduction and efficiency measures such as layoffs and salary cuts, Mercedes-Benz ushered in a proud financial report.
On February 24, Mercedes-Benz (hereinafter referred to as "Mercedes-Benz") released its 2021 financial report, which shows that as of December 31, 2021, mercedes-benz group industrial free cash flow was 8.6 billion euros, adjusted industrial free cash flow was 10.9 billion euros, and the total investment in real estate, plants and equipment for the whole year of 2021 was 3.8 billion euros. R&D expenditure on ongoing operations in 2021 was EUR 7.7 billion, an increase of approximately 7% year-on-year.
Mercedes-Benz Group's EBIT reached €29.1 billion in 2021, more than four times the amount in 2020 (€6.6 billion), and Mercedes-Benz's adjusted EBITDA for passenger cars and light commercial vehicles increased by 105% year-on-year.
Two years ago, Mercedes-Benz's profits shrank, and faced the dual challenges of electrification transformation and the new crown epidemic, and had to cut back on food and clothing. Compared with the data since 2015, Mercedes-Benz's operating performance has returned to the peak level before the epidemic.
In December 2021, Mercedes-Benz spun off the commercial vehicle business Daimler Trucks, which has been independently listed, and management believes that this valuation will not have a significant impact on cash flow and should therefore be excluded from the basis for determining dividends.
Mercedes-Benz is more focused on the new energy vehicle market, Mercedes-Benz Co., Ltd. Chairman of the Board of Directors Ola Kllenius said that in 2022 Mercedes-Benz will increase investment in pure electric models, accelerate the landing in the field of automotive software plans, and continue to promote the growth of luxury car business.
Harald Wilhelm, Mercedes-Benz's chief financial officer, predicts that rising raw material prices will lead to a 2 percentage point drop in profits this year. As a result, Mercedes-Benz is cautious about its 2022 performance expectations, expecting passenger car sales to be slightly higher than in 2021, with high-end car sales expected to increase by more than 10% and the adjusted sales margin of the passenger car business expected to be 11.5% to 13%.
High premium leads to high profits
In recent years, the throne of the world's luxury car sales has been firmly occupied by Mercedes-Benz. In 2021, BMW successfully counterattacked, with cumulative global sales reaching 2.52 million units, becoming the global luxury car sales champion.
In 2021, Mercedes-Benz's total sales of passenger cars and light commercial vehicles were 2.33 million units, down 5% year-on-year, of which passenger car sales fell to 2.0549 million units. Mercedes-Benz management said on the earnings call that the decline in sales was mainly due to the shortage of global semiconductor supply, and the third quarter of 2021 was the worst period for core shortages, but it is currently improving. "Mercedes-Benz will strengthen its cooperation with suppliers to reach more specific agreements on the quantity of supply, while developing cutting-edge technologies to create new generations of chips."
Although Mercedes-Benz sales have declined, the ability to absorb gold is still strong.
In 2021, Mercedes-Benz Group's net profit (excluding Daimler's truck and bus related businesses) rose to 14.2 billion euros, up 255% from 4 billion euros in 2020, and earnings per share rose by 280% to 12.89 euros. Adjusted return on sales reached 12.7%, exceeding the previous performance guidance of 10%-12%.
12.7%, the highest level of return on sales achieved by Mercedes-Benz in the past five years. Mercedes-Benz has been working hard to improve its profit margins, setting a 10% passenger car margin target in 2015, but its performance in recent years has not been impressive. After Mercedes-Benz passenger car EBIT margin reached a record 9.7% in 2017, it continued to decline, with 7.8%, 3.6% and 6.9% in 2018-2020, respectively.
Profit margins improved significantly in 2021, thanks to higher sales of premium models.
Over the past year, sales of Mercedes-Benz's high-end car series have increased by 30%, including Mercedes-Benz S-Class, G-Class and AMG series performance cars.
Mercedes-Benz G-Class Source: Mercedes-Benz
Among them, the cumulative delivery of S-class models worldwide was 87,000 units, an increase of 40% year-on-year, mercedes-AMG models delivered 16.7% y/y to 145,000 units, Mercedes-Maybach sales of 16,000 units, up 50.7% year-on-year, and Mercedes-Benz G-class sales also soared to a record 41,000 units.
The high average selling price of high-end cars has driven the Mercedes-Benz Group's turnover to 168 billion euros, compared with 154.3 billion euros in 2020, an increase of 8% year-on-year.
In 2021, when there is a serious shortage of chips, Mercedes-Benz terminal discounts have been greatly reduced, and the terminal price of vehicles in the market has been rising in the context of limited production capacity and demand growth. Mercedes-Benz 4S store sales staff revealed that the purchase of Mercedes-Benz S-Class now requires a price increase of about 100,000 yuan. To a certain extent, this also increased the performance profit of Mercedes-Benz.
In addition, a good product portfolio and a good performance of the used car business have contributed to higher profit margins.
According to the financial report data, as of December 31, 2021, the number of Mercedes-Benz employees was 172425, compared with 2020 (275943), a decrease of 38%. In the new year, Mercedes-Benz will continue to implement the cost reduction strategy. "We don't have specific (cuts) targets, blue-collar workers are more stable, and white-collar workers will continue to reduce fixed spending."
Kang Linsong said that in addition to reducing costs and increasing efficiency, the future strategic focus is to expand the scale of electric vehicle sales.
How to play in 2022?
Mercedes-Benz has made a lot of money, which is inseparable from the support of the Chinese market. In 2021, the Chinese market contributed 758,800 units to Mercedes-Benz's sales, accounting for more than 30% of the global share, of which 11,000 Maybach models were sold to China, accounting for more than 70% of the global sales of the model.
However, to cope with the next competition in the Chinese market, Mercedes-Benz is difficult to say easy.
In 2021, Mercedes-Benz lost to BMW, mainly because the main models such as GLC, C-class, and E-class have declined to varying degrees, and the decline rate of the three models has reached 17.7%, 14.8% and 9.3% respectively.
According to the plan, Mercedes-Benz will launch 21 new cars in China this year, including 8 new energy models, and plug-in hybrid versions of C-class, S-class and other models will also usher in the listing. The C-Class is the main sales model of Mercedes-Benz, and the plug-in hybrid version is listed, and sales are expected to increase.
Compared with fuel vehicles, expanding the electrification business is more difficult.
At present, the main pure electric model launched by Mercedes-Benz is EQC, which has been questioned by the market since its launch. In 2021, EQC's cumulative sales volume will be more than 5,000 vehicles, with an average monthly sales of less than 500 vehicles. The EQA, a pure electric vehicle launched in November 2021, retailed only 49 units in December last year.
EQC sales are not satisfactory, largely due to the defects in the idea of "oil to electricity". Zhang Xiang, an analyst in the automotive industry, said that "cost-saving reusing fuel vehicle systems is prone to design defects and other issues." Mercedes-Benz's luxury fuel vehicle business is very profitable, and it is not easy to make up its mind to develop new energy vehicles, resulting in Mercedes-Benz's development of new energy vehicles in BBA is relatively backward.
Mercedes-Benz EQC Source: Mercedes-Benz
Official news shows that in the second half of 2022, Mercedes-Benz will launch two pure electric models, namely EQE and EQS SUVs. That is to say, in the first half of the year, Mercedes-Benz still has to rely on EQC and EQA to conquer the pure electric market.
Different from the previous two pure electric models, EQE and EQS SUV are from the Mercedes-Benz EVA pure electric platform, after getting rid of the "oil to electricity" model, Mercedes-Benz in the Chinese pure electric vehicle market or will usher in a new turnaround.
EQE, which is positioned as a medium and large sedan, does not have many competitors in its market segment. With the similar body size of the NIO ET7 as a competitor, EQE has a cruising range of 660 km under WLTP conditions, and the NIO ET7 has a better cruising range, which can reach 700 km, and if equipped with a 150kWh solid-state battery, it can even increase the endurance to 1000 km.
The NIO ET7 has a maximum power of 480kW, a maximum torque of 850Nm, and zero hundred acceleration can reach 3.8 seconds. In terms of acceleration performance, EQE is slightly inferior, with a maximum power of only 215kW. Even the relatively low-positioned Tesla Model 3 High Performance Edition can compete with the Mercedes-Benz EQE, which has a maximum power of 357kW and an acceleration of only 3.3 seconds per 100 kilometers.
However, the advantage of EQE lies in the luxury sense in the Genes of the Mercedes-Benz brand, whether it is the oversized Hyperscreen super screen in the car, or the unique air suspension and adaptive damping of Mercedes-Benz, which makes EQE more confident in interpreting luxury electric cars.
From the sales level, it is predicted that Mercedes-Benz's electric vehicle business may not make rapid progress in 2022, and EQE and EQS SUVs are not volume models. Mercedes-Benz's way of playing is to increase the sales of its high-end series of products to grab more profits.
However, with a longer-term perspective, Mercedes-Benz has to cope with future competition, and the mid-size electric vehicle market is the territory that Mercedes-Benz must pay attention to.
The author | Qin Zhangyong
Edit the | Li Huanhuan