Soaring Chinese demand for luxury Mercedes-Benz cars and higher prices drove a better-than-expected profit for Daimler in the first quarter, helping it navigate the coronavirus crisis.
Mercedes-Benz sales in China hit 220,520 vehicles in the quarter, a rise of 60%, and outmatched the German carmaker’s performance in Europe where they were up 1.8% to 192,302.
“Favorable sales momentum at Mercedes-Benz Cars driven by all major regions, especially China, strongly supported the product mix and pricing in the first quarter,” Daimler AG said in a statement on Friday.
This reflected a quickening of China’s economic recovery in the first quarter to record growth of 18.3% from last year’s deep coronavirus slump. Unable to travel, wealthier Chinese consumers have used their disposable income to splash out on luxury items.
Chinese buyers also helped to turn around 2020 for Daimler, with sales rising in the second half of the year and offsetting weaker results in other regions, and its German competitors BMW Volkswagen, which said on Friday that its sales in China jumped 65% in March.
Daimler said its quarterly adjusted group earnings before interest and tax jumped to 5 billion euros ($6 billion) in the first three months of 2021 from 719 million euros a year before.
That was above average analyst expectations of 4 billion euros, prompting it to release key figures a week ahead of schedule. The comparable 2019 figure was 2.3 billion euros.
“The headline numbers are an impressive beat even ahead of whisper numbers, but we think many investors were already positioned for a blow-out quarter,” UBS analysts wrote.
Daimler on Thursday unveiled the EQS, its first electric car built on a dedicated platform that is seen as a bid to challenge Tesla’s global dominance.
Daimler CEO Ola Källenius said the company would not provide forecasts for how many EQS models it aims to sell, or what sort of profit margins he expected the vehicle to generate. But he said he had high expectations for the Chinese market, where there is “tremendous demand” for the traditional combustion engine S-Class model.
Daimler now joins rival Volkswagen AG with a dedicated electric platform. BMW will launch a dedicated platform in 2025.
Mercedes sales chief Britta Seeger said the launch of the EQS coincides with demand for electric vehicles that is growing faster than company executives once forecast.
“We thought by 2030 that half of our sales will be electric vehicles” and plug-in hybrid vehicles, Seeger said during a conference call. “What we currently see … is a stronger request of customers for EVs. We are even more positive that this jump can be a little bit faster.”