In 2024, Mercedes-Benz posted a 3% fall in global car sales, with 1.98 million vehicles delivered, compared to last year. The article explains in detail the most critical reasons for this decline, taking into account the challenges that the luxury car manufacturer faced in every major market.
From China’s economic slowdown and fierce competition from domestic rivals to Europe’s subsidy cuts and escalating EV challenges, Mercedes-Benz’s year was marked by significant headwinds. Additionally, internal production setbacks and strategic pivots further complicated its path forward. Understanding these factors sheds light on the hurdles the brand must overcome to regain momentum in a shifting automotive landscape.
China’s Slowdown as a Major Headwind
China, the world’s largest auto market, has long been a cornerstone of Mercedes-Benz’s success. A burgeoning middle class and a taste for luxury vehicles had previously driven the brand’s strong growth. Its S-Class and Maybach models, once status symbols, thrived in a market eager for high-end European brands. However, 2024 proved to be a challenging year as the Chinese economy grappled with a significant slowdown and a slumping property market. This economic turbulence not only dented overall car sales but also hit the luxury segment particularly hard. For a premium brand like Mercedes-Benz, the ripple effects were unavoidable.
Sales in China fell by 7%, accounting for just 683,600 vehicles in 2024—a noticeable drop compared to the 737,200 vehicles sold in 2023. Reduced consumer confidence amid economic uncertainty played a major role in this decline. Buyers who might have previously opted for high-end models like the S-Class or Maybach turned their attention to more affordable or locally manufactured alternatives. Compounding the issue was the rise of domestic competitors such as BYD, which offered competitive models at a fraction of the price.
Mercedes’s strategy of leaning into ultra-luxury vehicles as a profit driver backfired in this environment. The market’s hesitation to splurge on premium cars not only hurt sales but also undermined its push for higher-margin models. Without robust Chinese demand to offset sluggish sales in other regions, Mercedes-Benz struggled to maintain its global momentum.
Europe’s EV Woes from Subsidy Cuts and Fierce Competition
Europe, another key market for Mercedes-Benz, presented its own set of challenges in 2024. Beyond subsidy cuts, the region saw increasing competition from domestic and international EV manufacturers, coupled with a more cautious consumer base due to economic uncertainties. These factors collectively created a challenging environment for luxury automakers. Several countries, including Germany, ended or scaled back electric vehicle (EV) subsidies, dealing a blow to consumer demand. For instance, Germany abruptly halted its subsidy program in late 2023, resulting in a 37% drop in EV sales by mid-2024. With upfront costs for EVs remaining higher than their internal combustion counterparts, many potential buyers postponed their purchases, creating a significant drag on sales.
At the same time, Mercedes-Benz faced intensified competition in the EV market, particularly from Chinese automakers entering Europe. Brands like BYD offered advanced EVs at competitive prices, making it difficult for European automakers to retain their foothold. While Mercedes-Benz’s EQ lineup, including the EQS and EQE, aimed to capture the premium EV segment, weaker-than-expected demand raised questions about whether the models fully addressed market needs or missed the mark due to high price points, limited range, or insufficient features compared to competitors.
This dual pressure—reduced consumer incentives and aggressive competition—complicated Mercedes-Benz’s efforts to establish itself as a leader in the EV space. As a result, its European sales fell by 3%, further highlighting the difficulties faced in adapting to an evolving automotive landscape.
Navigating the EV Transition with Production Hurdles and Platform Cancellation
Mercedes-Benz’s ambitious EV transition hit several roadblocks in 2024. Supply chain disruptions and production challenges hampered the company’s ability to meet growing demand for EVs. Additionally, the brand’s decision to cancel its next-generation MB.EA Large platform—initially intended for successors to the EQS and EQE—raised questions about its long-term EV strategy.
The cancellation of the platform, reportedly saving Mercedes between $4.3 billion and $6.5 billion, signals a recalibration of priorities in response to poor sales of current EQ models. While this move may provide short-term financial relief, it leaves the company relying on upgraded versions of its existing EVA2 platform for future EVs. These updates, including a shift to 800-volt architecture and more efficient battery systems, aim to address current shortcomings but may not be enough to regain a competitive edge.
This strategic pivot coincides with a broader slowdown in Mercedes-Benz’s EV ambitions, which dates back to Q3 2024, and a decline in the brand’s electric car sales. The company has postponed its goal of achieving 50% electrified car sales by 2025 and scaled back plans for an all-EV lineup by 2030 in certain markets. Combined with production bottlenecks, these shifts underscore the challenges Mercedes-Benz faces in balancing innovation with market realities.
In Sum
Mercedes-Benz’s 3% decline in sales in 2024 underscores the complex challenges faced by automakers today. From China’s economic headwinds to Europe’s EV subsidy cuts and internal production struggles, the brand’s year has been a mix of external pressures and strategic missteps. As competition intensifies and markets evolve, Mercedes-Benz must refine its approach to thrive in a dynamic global automotive landscape while navigating the transition to electric mobility.
