Big auto brands around the world are experiencing some heavy losses ever since the COVID-19 pandemic temporarily halted production and halted vehicle sales.
Daimler AG, the parent company of such brands like Mercedes-Benz, Mercedes-AMG, and Mercedes-Maybach, recently posted its results for Q1 2020, and as expected all is not well.
For the first quarter of 2020, Daimler was able to produce a total of 644,300 passenger cars and commercial vehicles. While this may seem like a huge figure, it's actually 17% lower compared to last year's performance in the same period as the company was able to produce 773,800 units in total. Global revenue was also down for Q1 of 2020. From EUR 39.7 billion last year, the company only made EUR 37.2 billion, resulting in a 6% dip for Daimler.
But while the company did suffer some losses, not everything is looking negative for the auto giant. According to Ola Källenius, Chairman of the Board of Management of Daimler AG and Mercedes-Benz AG, they were able to minimize their losses by stopping production as early as March and moving towards cost management mode. With it, the company claims they were able to secure the Group's financial strength.
“The COVID-19 pandemic has substantial effects on the global economy - and our company. We took the proactive decision to stop production in March and moved very quickly into cash preservation and cost management mode. Now we have started with a gradual ramp-up of our production. At the same time, we are continuing to invest in key technologies, including electrification and digitalization. They are non-negotiable elements of our future,” said Källenius.
But despite being able to preserve cash early, Daimler admits that their original forecast for the financial year 2020 is no longer valid. With it, Daimler expects unit sales of Mercedes-Benz Cars, Mercedes-Benz Vans, Daimler Trucks, and Daimler Bus for 2020 to be below the levels of the previous year.
As early as now, Daimler has stated that sales by Mercedes-Benz Cars & Vans decreased by 16% to 546,700 units in Q1 of 2020. This is significantly less than what the company was able to produce last year with 652,400 vehicles built. The dip in sales also translated in slightly lower revenue of EUR 23.2 billion (Q1 of 2019 had EUR 24.1 billion of revenue).
Things are also not looking good for Daimler Trucks and Buses too. Starting with trucks, the company was only able to sell 92,468 examples for Q1 of 2020. In the same period last year, they sold 115,920 trucks which translates to a 20% dip. It's a similar story in buses as Daimler wasn't able to beat last year's sales figure of 5,526 units as they only sold a total of 5,106 in Q1 of 2020.
Despite the early setbacks being experienced by the company, Daimler is confident that they will be able to weather the storm. They also claimed that they are well-positioned to manage the business both during and after the pandemic. The company plans to make this a reality by reducing spending on property, plant, and equipment, as well as on R&D compared to the previous year.