Part 5/9:
As consumer interest wanes, Mercedes finds itself in a precarious position with diminishing profit margins. The shift towards lower-priced, entry-level luxury vehicles has undercut the profitability of their traditional high-end models like the S-Class, which has faced a 25% sales drop. The company has acknowledged the pressure on its returns, with a reported 4.7% drop in return on sales—in a market that is becoming increasingly competitive.
Amid these headwinds, competitors like Volkswagen and BMW have recently issued profit warnings, indicating that the entire European automotive sector faces substantial hurdles with demand waning and competition intensifying.