Cutting ties with China is 'unthinkable', says Mercedes-Benz CEO

FRANKFURT, Apr 30 (Reuters): Cutting economic ties with China is unrealistic, the chief executive of luxury carmaker Mercedes-Benz told tabloid newspaper Bild am Sonntag, and said attempting to do so would put most of Germany's industry at risk.
Europe is trying to reduce its dependency on China as the disruption of the pandemic and the Ukraine crisis have highlighted the dangers of relying on dominant suppliers and the fragility of supply chains.
But Ola Kaellenius said decoupling from China, the world's second largest economy, was "unthinkable for almost all of German industry".
"The major players in the global economy, Europe, the U.S. and China, are so closely intertwined that decoupling from China makes no sense," he was quoted as saying.
German carmakers depend on the Chinese car market, the world's largest, and Mercedes-Benz counts China's Beijing Automotive Group Co Ltd and Geely Chairman Li Shufu as its two top shareholders.
China accounted for 18% of revenues and 37% of car sales at Mercedes-Benz in 2022 and Kaellenius predicted more to come.
"Our sales figures in China are increasing and I am quite optimistic that we will also grow this year. During the corona years, the wealthier Chinese in particular made extraordinary savings," Kaellenius said. "This purchasing power should benefit us."
AFP adds: Mercedes-Benz said Friday its net profits rose by 12 percent in the first quarter to 4.0 billion euros, buoyed by demand for its vans and priciest premium cars.
The German automaker said its revenues were up eight percent compared to the same period last year, reaching 37.5 billion euros, despite supply chain disruptions.
Sales in its top-end car range which includes the Mercedes-Maybach shot up by 18 per cent to 91,772 units, pulling up the carmaker's bottom line.
Its vans division also reported a jump of 25 per cent in revenues.
"Our focus on top-end cars and premium vans has made Mercedes-Benz more weatherproof, allowing us to accelerate our digital and electric transformation -- even in a period of economic uncertainty," said Harald Wilhelm, chief financial officer of the group.
The group said recent turbulence in the banking sector in the US and Europe were new uncertainties weighing on its outlook but energy prices are expected to be less volatile.
In addition, global supply bottlenecks are expected to ease further.
The strong demand for its vans led it to raise its profitability outlook to 11-13 per cent from 9-11 per cent previously.
On cars, the comparative target is seen to reach the upper end of 12-14 percent, it said.