AutoBeta(AutoBeta.net)10/18 Report--

Since 2020, the global automobile market has been hit by the COVID-19 epidemic, resulting in a double decline in the sales performance of many car companies, even the always strong luxury brand Mercedes-Benz, with a net loss of 1.7 billion euros (13.339 billion yuan) in the second quarter. However, as the market recovers, Daimler's performance has recovered and rebounded more than expected.

A few days ago, Daimler released a forecast of third-quarter results, with a profit before interest and tax of 3.07 billion euros (24.076 billion yuan) in the third quarter, not only better than the same period last year, but also well ahead of analysts' expectations of 1.61 billion euros. Due to the sharp increase in profits, Daimler's cash flow has now reached 5.14 billion euros (40.327 billion yuan), which is also much higher than expected.

Prior to this, due to the decline in sales caused by the novel coronavirus pandemic, Daimler showed varying degrees of decline or even losses in the first and second quarters, and its pre-tax profit in the first quarter fell 78% from 2.798 billion euros (21.955 billion yuan) in the same period last year to 617 million euros (4.841 billion yuan). The second-quarter profit posted a loss of 1.68 billion euros (13.18 billion yuan), from surplus to negative.

In response to the crisis, Daimler also approved a loan agreement of 12 billion euros in early April to increase financial flexibility. However, the company has not yet used the 11 billion euros of credit, which runs until 2025.

At the same time, to make up for losses, Daimler also reduced spending on real estate, factories and equipment, and research and development. During the outbreak, it also announced the closure of factories in Europe, the United States and other places to prevent more lasting effects of the epidemic, and even if the market recovers, the company has stopped making cars in the United States to focus on the more profitable SUV. It is worth noting that this is Daimler's largest shutdown since World War II.

In addition to the company's clear plan to cut at least 10,000 jobs worldwide by 2022, Daimler issued a pay cut in April-a 20% pay cut for members of the company's supervisory board over the next three months. the salary of other senior managers will be cut by 10%, which shows that the impact on Daimler is quite serious.

Earlier this month, Daimler said it would cut Mercedes-Benz's fixed costs, capital expenditure and R & D spending by more than 20 per cent by 2025. Another reason for the above situation is that the company has made plans for strategic reform, which will cost more money for electrification transformation.

At a time when the transition to electrification is costly, the group will also focus less on sales and more on how to boost earnings, focusing on the industry's most profitable segments-luxury cars and sport utility vehicles.

However, for Daimler and its Mercedes-Benz brand, China as the group's main strategic market is bound to remain the same. According to the data, global sales of Mercedes-Benz passenger cars in the third quarter were about 614000, up 3.9% from a year earlier, the first year-on-year increase so far this year. Among them, the Chinese market contributed about 223600 vehicles, a sharp increase of 23.4% over the same period last year, accounting for nearly 40% of Mercedes-Benz's global sales. With the exception of China, sales in Germany increased by 4% compared with the same period last year, while sales in the United States fell by 9.4%.

Affected by the epidemic and other factors, from the performance of many car companies in the first half of the year is particularly difficult, sales performance have declined. This is also due to the global environment, but as the market gradually recovers, strong car companies have rebounded, as can be seen in Mercedes-Benz's third-quarter earnings forecast.

Harald Wilhelm, Daimler's chief financial officer, also said in a statement: "our very strong performance in the third quarter is further proof that we are on the right path to reduce costs and increase efficiency, and we expect this positive momentum to continue in the fourth quarter."

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