Mercedes proves strategy strength by Q1 earnings

Mercedes is showing off the strength of its more traditional pricing strategy in the Q1 earnings report, which has crushed investor expectations.

Group earnings grew 5% year-over-year to 5.5 billion euros ($6.04 billion) and revenues grew 8% to 37.5 billion euros ($41.19 billion). The discrepancy between earnings and revenue growth is correlated to a slight dip in profit margins, down to 14.8% from 16.4% a year ago.

Mercedes maintains one of the most robust margins in the industry and plans to maintain them throughout the rest of this year. Mercedes is investing heavily in an ever-expanding lineup of Electric vehicles, most recently the Mercedes-Maybach EQS SUV.

This investment has been successful, with EV sales nearly double YoY in the first quarter of the year. Mercedes has been able to keep its prices high and without adjustment, countering Tesla’s more aggressive pricing strategy, helping to limit damage to profit margins. Investor confidence is evident in Mercedes’ stock offering.