Mercedes-Benz expects high vehicle inventories to continue into the second quarter due to ongoing supply chain issues, particularly the volatile semiconductor supply. This is despite the company's high pricing strategy which, according to CFO Harald Wilhelm, could have allowed for higher sales if not for the production constraints.
Approximately half of the €1 billion in headwinds experienced in the first quarter stemmed from raw material price increases. The remaining portion was attributed to energy and logistics costs, and inefficiencies resulting from production stoppages caused by supply chain problems.
The company notes a significant number of 'blocked vehicles', a situation that will persist even as some previously blocked vehicles are released. The semiconductor shortage remains a major constraint on production, hindering Mercedes-Benz's ability to meet potential demand.
Mercedes-Benz cars are on display for sale at a showroom in Saint Petersburg, Russia April 21, 2022. Picture taken April 21, 2022. REUTERS/Anton Vaganov
BERLIN, April 27 (Reuters) - Mercedes-Benz (MBGn.DE) said it expects inventories to remain high in the second quarter as supply chain bottlenecks hinder production and deliveries, with semiconductor supply still very volatile.
"There is quite a high number of blocked vehicles - a part of that will be turned around but there will be new ones coming," Chief Financial Officer Harald Wilhelm said on an analysts call on Wednesday, after the carmaker reported first quarter results.
While the company's high pricing strategy is in part based on product scarcity, it could have sold more vehicles in the first quarter without pushing prices down, Wilhelm said.
"It's a shame as the semiconductor situation puts a constraint," he said.
Around half of the 1 billion euros ($1.1 billion) registered in headwinds in the first quarter were due to raw material price increases, Wilhelm said, with the rest split between energy and logistics costs and the inefficiencies of needing to stop and start production amid supply chain troubles.
($1 = 0.9412 euros)
Reporting by Victoria Waldersee; Editing by Maria Sheahan
Our Standards: The Thomson Reuters Trust Principles.
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