Mercedes-Benz Group AG raised its earnings forecast for the year, helped by rising sales for high-end cars and profit growth at its van division.
The automaker said it now expects industrial free cash flow to be “slightly above” the last year’s level, rather than in line with it. Earnings before interest and tax in 2023 will reach last year’s level, above a previous prediction of a slight decline, the company said Wednesday in a statement.
A jump in commercial van sales prompted Mercedes to lift its forecast for that segment. The company now expects the vans unit to generate an adjusted return on sales of as much as 15% this year.
Chief Executive Officer Ola Källenius is trying to bolster margins to help fund a costly shift to electric cars. The plan involves focusing resources on top-end vehicles including the Maybach limousines, AMG performance cars and G-Wagon offroader, while shifting away from less profitable entry-level models like the compact A-Class.
Sales of those higher-margin vehicles rose 12% in the second quarter, Mercedes said, defying economic gloom in major markets like China. Sales in the entry and core segments grew at a slower place, in line with the luxury shift.
Luxury carmakers overall have held up well despite slowed growth across the industry, in part because supply problems have eased and wealthier customers are less affected by record inflation. Aston Martin Lagonda Global Holdings Plc surged Wednesday after second-quarter revenue beat targets.
Even mass-market carmakers in Europe remain bullish. Jeep maker Stellantis NV reported better-than-expected first-half results Wednesday while lifting its full-year industry views for Europe and some other regions. Renault SA, due to report earnings on Thursday, upgraded its outlook amid lower costs and strong demand for new models like the Austral crossover.
--With assistance from Albertina Torsoli.
(Updates with additional details throughout.)
