On May 8, 2025, the annual general meeting of Mercedes-Benz turned into a battleground for CEO Ola Källenius as shareholders voiced their discontent over the company's luxury strategy and its underwhelming performance in the Chinese market. The meeting highlighted significant concerns regarding the automaker's direction, particularly as competitors have been perceived as more innovative and cost-effective.
Ingo Speich from Deka Investment led the charge against Källenius, sharply criticizing the company’s strategy. He pointed out that the company is facing a "China disaster," where rivals are outperforming Mercedes-Benz in terms of innovation and pricing. The financial figures presented at the meeting did little to assuage shareholders' fears. Earnings per share plummeted to 1.74 euros in the first quarter, down from 2.86 euros the previous year, reflecting a worrying trend for the luxury automaker.
Additionally, revenue dropped by 7.38%, amounting to 33.22 billion euros, further compounding shareholder anxiety. The potential risks from U.S. tariffs and the uncertain political landscape were also flagged as additional burdens on the company's performance. As Källenius faced these mounting pressures, he proposed a strategic pivot to regain investor confidence.
In a surprising move, Källenius announced a renewed focus on China, emphasizing increased local development and production. This China offensive aims to strengthen Mercedes-Benz's foothold in a market that is increasingly crucial for luxury automakers. Källenius also indicated that the company would continue to employ modern combustion engines alongside its electric mobility initiatives, a decision that received a positive response from shareholders who were previously concerned about an exclusive shift to electric vehicles.
To further address cost concerns, Källenius revealed a cost-reduction program targeting administrative staff in Germany. This announcement was seen as a necessary step to streamline operations amidst declining profitability. Despite these initiatives, the road to recovery appears steep. Although the stock rose by 9.45% in the past month, it still languishes 27% below its level from the previous year. On the day of the meeting, the stock showed a slight dip of 0.92%, closing at 53.94 euros.
Moreover, the impact of a recent dividend cut loomed large over the company’s stock performance. On the same day, Mercedes-Benz shares traded significantly lower due to the adjustment for a recently declared dividend of 4.30 euros per share, which was deducted from the stock price at the start of trading. This led to a 6.41% drop, bringing the share price down to 50.53 euros—a decline that was merely a reflection of the dividend adjustment rather than a loss in value.
Despite the apparent setback, the company is set to distribute a total of 5.49 billion euros in dividends to its investors, albeit with a slight reduction of 1.26% compared to the previous year. Analysts have been weighing in on the stock's potential, with Bernstein Research assigning a Market-Perform rating and UBS AG giving it a Neutral rating as of May 2, 2025. Other institutions like RBC Capital Markets and Warburg Research have also provided ratings that suggest cautious optimism.
As of May 8, 2025, the stock of Mercedes-Benz Group has endured losses of 6.52% for the day, while shareholders have faced an 11.55% drop over the past three months. The broader market, represented by the E-Stoxx 50, has shown less volatility, increasing by 0.54% on the same day. The DAX index opened the trading day on a stronger note, calculated at around 23,297 points, which is 0.8% below the previous day's close.
Despite the challenges, Källenius's announcements have been met with cautious optimism from some investors, particularly regarding the company’s dual approach to combustion and electric vehicles. The upcoming quarterly results will be a critical test for Källenius's crisis management strategy and whether these measures can stabilize margins and restore confidence among shareholders.
The stock remains 23.07% below its 52-week high of 70.13 euros, with a 52-week low recorded at 45.60 euros. As the company navigates these turbulent waters, its market capitalization stands at approximately 51.93 billion euros, positioning it in the middle tier of the DAX, where it holds a 2.50% share.
As the automotive industry continues to evolve, the decisions made by Källenius and his team will be crucial in determining whether Mercedes-Benz can reclaim its place at the forefront of luxury vehicle manufacturing amidst fierce competition from brands like BMW, Audi, and Tesla. The next few months will be pivotal for the company as it seeks to balance innovation, cost management, and shareholder expectations.
