For most car companies profit margins are tight and made up for in the volume of sales. For luxury car companies the opposite is true. Mercedes, Audi, and BMW all survive by selling cars that have high profit margins in low volume. What this means is that it wants to make as high a profit margin as possible without forsaking quality at the expense of market share. In the first quarter of this year Mercedes had an operating profit margin of 3.3%, 7.8% lower than Audi and 6.6% less than BMW. To alter this Mercedes is focusing on its new s class sedan not only in terms of the car itself but in strategy of the sales.
Poor management lead to Mercedes having separate sale management in China so Mercedes dealerships were competing with each other and led to reductions in price. To correct this Mercedes has streamlined management by merging the separate sales organizations. 2013 should be a much stronger year for Mercedes profit margins once the China sales organizations are no longer competing.
Source: Automotive News