Record Sales for Mercedes Mean Big Profits for Daimler

But outlook is cautious for 2017.

by on Feb.02, 2017

Daimler Chairman Dieter Zetsche with a concept version of the Generation-EQ battery-car.

With Mercedes-Benz capturing the crown as the world’s best-selling luxury car brand last year, parent Daimler AG now has another reason to celebrate.

The German company saw its fourth-quarter net earnings surge by 18%, to 2.2 billion euros, or $2.4 billion, up from 1.9 billion euros the year before. For the full year, Daimler reported a profit of 8.7 billion euros, or $9.4 billion, a slight year-over-year improvement.

By the Numbers!

The upturn demonstrated that Daimler is on track as it broadens its scope with new technologies and new lines of business, declared CEO Dieter Zetsche. “Those who wish to shape the future of the automobile at the forefront of the automotive industry need both financial strength and innovative skill,” Zetsche said in a statement. “In 2016, we demonstrated that the combination of these two factors at Daimler is stronger now than ever before.”

(Click Here to check out the new, 603-hp Mercedes-AMG E63 S wagon.)Recent Daimler models have expanded the range of technologies to include such innovations as infrared night vision and semi-autonomous systems like collision avoidance with pedestrian detection. Daimler plans to become a leader in both autonomous and even fully driverless systems, Zetsche has suggested.

Smart car sales have improved but still don't do much for Daimler's bottom line.

During the Paris Motor Show last autumn, he outlined what he called the “CASE” for the future, an acronym referring to connected vehicles, autonomous driving, sharing services and electrification. The CEO also used the Mercedes news conference to reveal a fully electric concept vehicle that will be transformed into a production model sold through the all-new sub-brand Mercedes-EQ.

And just last month, Daimler announced that it would expand the Mercedes presence in various alternative mobility ventures. The marque’s compact CLA and GLA models will now be offered in several U.S. locations through the Car2Go car-sharing service. And future autonomous vehicles will be introduced into Uber’s ride-sharing network.

(For more on those partnerships, Click Here.)

Those moves aren’t likely to have much of a short-term financial impact, however. For now, Daimler is concentrating on a variety of business lines, with an emphasis on its two automotive brands: Mercedes and Smart. The latter, a producer of compact city cars, continues to struggle to meet its initial aspirations, but Smart has seen a surge in demand since redesigning its key Fortwo model a little over a year ago.

As for Mercedes, the maker has not only been remaking its existing line-up but adding new variants and a variety of all new nameplates. And while it has continued to push its traditional sedans and coupes, it has pushed into new white space in the crossover and sport-utility segments now coming to dominate global automotive demand.

A prototype autonomous truck from Daimler's U.S.-based Freightliner division.

Daimler’s strong performance with Mercedes was driven, in particular, by demand in the critical U.S. and Chinese markets. Overall, the brand’s 4Q operating earnings rose 53% to 2.56 billion euros.

But there were some weak line items on the corporate books, notably the truck side of the business, which suffered sales declines in North America, and Europe, as well as Turkey and the Mideast.

And despite the surge in net earnings, Daimler actually fell slightly short of analysts’ expectations for the final quarter, with growing concerns that sales in those key U.S. and Chinese markets may be slowing.

Analysts in Europe warned that the truck side of the company could prove an even bigger drag on the company in the coming year.

Shareholders aren’t the only ones celebrating Daimler’s year-end results. The maker also announced Thursday that 130,000 eligible German employees will each receive profit-sharing checks worth $5,400.

(Click Here to learn why Mercedes has taken the global luxury sales lead.)

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