The 2024 Annual Reports of Mercedes-Benz, BMW, Audi and Volvo: Revenue and Net Profit Dropped.

The 2024 annual financial reports of traditional luxury automakers BBAV (Mercedes-Benz, BMW, Audi, Volvo) have all been released.

Not surprisingly, the performance of these four automakers in 2024 showed a decline in both revenue and net profit.

Among them, BMW had the largest decline in revenue, which dropped by 8.4% to 142.38 billion euros. In terms of profit, Audi's operating profit decreased by 37.8% to 3.903 billion euros, the largest decline among the four.

"The Chinese market" is a term they often use to explain the decline in their financial report performance, and "accelerating/continuing transformation" is their common response measure.

Not long ago, Bernd Pischetsrieder, Chairman and CEO of Volkswagen Group (China), appeared in Hefei and stood on his desk to thank the CEA team. This move was interpreted as a signal that the Volkswagen Group doesn't want to "be out of the game" in the Chinese market.

To this end, Audi's PPE platform, after being postponed for several years, will finally enter the Chinese market this year. Mercedes-Benz, which also doesn't want to be out of the game, is about to launch the CLA model equipped with the MMA platform. BMW's new generation models are also in preparation, and Volvo hopes to further enhance its position with the SPA2 platform.

Entering 2025-2026, the new architectures, new models, and new technologies of these traditional luxury brands will be launched one after another, some through independent research and development, and some through cooperation with Chinese enterprises.

Correspondingly, the period before the new technologies are launched and the new cars achieve substantial sales is regarded as the "darkness before the dawn" for traditional luxury automakers.

The dormancy and potential of BBAV may be somewhat glimpsed from their 2024 financial reports.

Is the era of making money effortlessly over?

As soon as the 2024 financial reports of BBAV were released, the argument that "the era of traditional luxury automakers making money effortlessly has passed" resurfaced on various platforms. The reason for this is nothing more than the obvious decline in the performance of these four automakers, especially Mercedes-Benz, BMW, and Audi.

In 2024, Mercedes-Benz, BMW, Audi, and Volvo delivered 2.389 million, 2.4508 million, 1.6712 million, and 763,400 new vehicles respectively. Among them, only Volvo achieved a growth of 7.7%, while Mercedes-Benz and BMW declined slightly by 4%, and Audi's sales volume decreased significantly by 11.8%.

The poor sales performance naturally affected the data in the financial reports.

With the decrease in the number of cars sold by BBA, their revenue naturally declined. In 2024, the revenues of both Mercedes-Benz and BMW exceeded 140 billion euros, decreasing by 4.5% and 8.4% year-on-year respectively. Audi's revenue was 64.532 billion euros, also declining by 7.6% year-on-year.

Even Volvo, which achieved sales growth, saw its net sales decrease from 552.3 billion Swedish kronor to 526.8 billion Swedish kronor, a year-on-year decline of 4.6%, similar to the decline rate of Mercedes-Benz.

What's more crucial is the decline in profit.

Mercedes-Benz is still the most profitable among these four companies. It obtained a net profit of 10.409 billion euros in 2024, a year-on-year decrease of 28.4%.

BMW's net profit of 7.678 billion euros (-36.9%) is second only to Mercedes-Benz, and Audi only announced an operating profit of 3.903 billion euros (-37.8%).

If we only look at Volvo Cars, its net profit was 15.9 billion Swedish kronor (about 1.445 billion euros), an increase of 12.8% year-on-year. However, at the Volvo Group level, the adjusted operating profit decreased by 16% to 65.7 billion Swedish kronor (about 5.975 billion euros).

In fact, after experiencing a sharp drop in BMW's net profit by 83.8% in the third quarter, a stunning 91% drop in Audi's operating profit, and a 53.8% decrease in Mercedes-Benz's net profit, the final decline in the performance of BBAV in 2024 was already expected and didn't cause much of a stir.

At the same time, as the problems become more and more prominent, companies like Mercedes-Benz among BBAV no longer avoid the competitiveness of new energy products and the influence of Chinese competitors in their financial reports.

The Crux of the Matter

As the long-term "profit source" for BBAV, the Chinese market is a key variable affecting their performance.

Oliver Zipse, Chairman of the Board of Management of BMW Group, directly stated in the financial report that "the continuous weakness of the Chinese market (in 2024) significantly dragged down the overall performance." Mercedes-Benz also said that the main reasons for the decline in the profit of its passenger car business were "a decline in sales (especially in the Chinese market), insufficient pricing power, and an unfavorable model mix."

What does "drag down" mean?

It means that although various brands of BBAV achieved year-on-year sales growth in some overseas markets, due to the decline in sales in the Chinese market, the large base of the Chinese market itself, coupled with the instability of the performance in overseas markets, it was difficult to make up for the "gap" in the Chinese market in terms of both sales volume and revenue.

Reflected in the financial reports, BMW's sales volume in China decreased by 13.4% to 715,200 vehicles in 2024, and its revenue decreased by 22% to 31.786 billion euros, which was more than 9 billion euros less than in 2023.

Mercedes-Benz, which also announced its revenue in the Chinese market, saw a relatively less obvious decline in its revenue in the Chinese market in 2024, dropping from 25.284 billion euros to 23.139 billion euros.

The current slightly weak performance of BBAV is still due to the new energy sector.

Looking at the financial reports, the sales of new energy vehicles of these four traditional luxury brands in 2024 showed two different trends.

The ones with increased sales were BMW, which was the earliest to start the electrification transformation among BBAV, and Volvo, which had the most radical electrification transformation.

The former delivered 426,300 pure electric vehicles in 2024, a year-on-year increase of 13.5%, and its proportion in the total sales volume further increased to 17.4%.

The latter delivered 175,200 pure electric vehicles in 2024, a year-on-year increase of 54%, and 177,600 plug-in hybrid vehicles, a year-on-year increase of 16%. New energy vehicles accounted for 46%.

The significant increase in Volvo's pure electric vehicle deliveries is inseparable from the contribution of the EX30. This pure electric SUV, which is priced at less than 40,000 euros in Europe, has continuously ranked among the top ten in the European pure electric vehicle sales list for several months since its launch.

However, it is obviously difficult to turn the situation around with just one model. In October 2024, when the sales of the EX30 were still rising, Volvo still lowered its sales forecast from 12%-15% to 7%-8% for 2024.

The most fundamental way for BBAV to get rid of the impression of "converting fuel vehicles to electric vehicles" in the Chinese market in the era of electrification is to introduce convincing products.

Therefore, we can see that Mercedes-Benz and BMW continue to invest a large amount of money in research and development. Their research and development investments in 2024 reached 8.7 billion euros and 9.1 billion euros respectively.

The research and development expenses of Audi and Volvo were 4.1 billion euros and 31 billion Swedish kronor (about 1.971 billion euros) respectively. The research and development expenses of Mercedes-Benz, BMW, and Audi accounted for more than 6% of their total revenue, and Volvo's research and development proportion was also 5.9%. Except for Volvo, the proportion of new energy vehicle sales in the total sales volume of the other three brands was all less than 20%. The effect of research and development on the electrification transformation has not been fully realized yet.

There is no need to elaborate further on the competitiveness of BBAV's new energy products in the Chinese market. More importantly, the models positioned in the middle range of these brands are desperately resisting the impact of Chinese new energy vehicles by giving subsidies to dealers and reducing prices at the terminal. Even the C-class and E-class cars, which have large sales volumes at the terminal of Mercedes-Benz, offer a 15% discount.

Even super high-end models with a stable market share like the Mercedes-Benz S-class and Maybach experienced fluctuations in sales in the third quarter.

On one side is the rapid rise of Chinese new energy brands, and on the other side is the slow transformation of their own huge architectures. Undergoing painful reforms has become the main theme for BBAV in recent years.

Building Up Strength to Break the Situation

Since 2024, we have increasingly seen BBAV "streamlining".

The most famous example is Volkswagen Group's plan to close factories and lay off employees, which caused a great stir in Germany.

In December 2024, despite strong opposition from the German public, Volkswagen still insisted on announcing a plan to lay off 35,000 people in Germany within five years, including 1,900 people at Porsche and 7,500 people at Audi. The number of layoffs at Audi accounted for 8.6% of its total global workforce.

Audi said that the layoffs are part of a cost-cutting plan, which can save it 1 billion euros in the medium term. At the same time, Audi will invest 8 billion euros in German factories to help produce electric vehicles.

Traditional luxury automakers, which have always been wealthy, are starting to increase revenue and reduce expenditure. If Audi represents the typical example at the organizational level, then Mercedes-Benz represents the one at the product level.

The plan to discontinue the Mercedes-Benz A-class, which has been rumored for three years, seems to have been confirmed by Markus Schäfer, Chief Technology Officer of Mercedes-Benz, two days ago.

He said that Mercedes-Benz has not developed a replacement product for the existing A-class, and the reason for cutting the A-class is the practical problem of insufficient profit. The A35 or A45 AMG will also become history.

What enables a company to survive and continue to develop is not only saving expenses but also its own strong profitability. Their new platforms are catching up with the capabilities of Chinese new energy brands and also hope to do better in traditional advantageous projects.

The new platform models of BBAV will be launched one after another in the next two years.

Mercedes-Benz officially released the new generation CLA built on the new MMA platform on March 14, and the domestically produced long-wheelbase version is expected to be launched at the end of this year.

The models on this platform use the popular 800V+SiC technology in Chinese new energy vehicles and are equipped with a two-speed gearbox. The 85kWh ternary lithium battery can achieve a CLTC range of 850km, with an official power consumption of 12.2kWh/100km, a peak charging rate of 320kW, and the four-wheel drive version can accelerate from 0 to 100 km/h in the fastest 4.9 seconds.

Judging from the performance of the CLA, at least in terms of the most basic performance and energy consumption of the vehicle, it has been infinitely close to the level of the first echelon of domestic products. Mercedes-Benz claims that it can also achieve full-scene map-free navigation assistance (NOA) in terms of intelligence, but in the current situation where the intelligence level is gradually converging, the benefits brought by the latter may be limited.

As for BMW, the production of its new generation platform concept car is planned to start in the second half of this year, and more information is being disclosed as time goes by.

The focus of the new generation platform may be on range, energy consumption, and intelligent innovation.

The new generation of BMW will use 4695 and 46120 large cylindrical batteries. Compared with the current batteries, the energy density of large cylindrical batteries is increased by 20%, the range is increased by 30%, and the charging speed is increased by 30%. With the 800V platform, it can replenish energy for 300 kilometers in 10 minutes.

According to BMW, the range of the new generation platform models is at least 600km and can reach up to 900km. Its intelligent cockpit is equipped with technologies such as the Panoramic Vision, 3D Head-Up Display, and Centered Control.

Audi's PPE models, which have been postponed for several years, are also about to enter the market.

The Q6 e-tron equipped with this platform will be equipped with a 94.9kWh battery, with a WLTP range of 625km, a peak power of 285kW. In its SQ6 e-tron version, it can achieve a 0-100 km/h acceleration in 4.3 seconds, a top speed of 230km/h, and a maximum charging power of 270kW.

As for Volvo's SPA2 platform, based on the SPA1 platform, it has made improvements in vehicle body lightweighting, electric drive system efficiency improvement, increased range, and enhanced energy replenishment speed.

The ES90 built on the SPA2 platform, the dual-motor version equipped with a 102kWh battery can obtain a WLTP range of 700km. Using the 800V high-voltage fast charging technology, the DC fast charging power can reach 350kW. The maximum power of the dual-motor performance version is 500kW, the peak torque is 870N·m, and the 0-100 km/h acceleration can reach the level of 3 seconds.

The new platforms and new models are ready to go. At least in terms of theoretical capabilities, there is no obvious gap compared with domestic new energy vehicles. Even in the software field, which European companies are not good at, they are looking for opportunities to cooperate with relevant enterprises, such as the cooperation between Audi, BMW and Huawei, and increasing investment in China.

BBAV has the determination to make difficult choices, and the new products are coming in a menacing manner. However, another question also lingers in people's minds: how to price them?

Traditional luxury automakers used to have sufficient pricing power in the Chinese market, and the market was chasing after them. However, in the era of new energy, domestic enterprises are reshaping people's perception of luxury, and it is difficult for BBAV to replicate their high-end stories for new energy vehicles.

The most fatal thing is that the strategy of "technology for the public" has greatly brought down the experience of higher-level models to ordinary models. In this almost brand-new era, will BBAV still adhere to the high pricing of new energy vehicles? If so, we are curious about how they will use "technological luxury" to compete with "technology for the public".

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