Mercedes-Benz Expects High Q2 Inventory Amid Global Chip Shortage

German based car manufacturer Mercedes-Benz Group AG (ETR: DDAIF) is expecting inventories to remain high in the second quarter even as supply chain glitches continue to affect production and deliveries. The global computer chip shortage is responsible for the production disruptions which has largely affected the auto industry.

This was revealed by the company’s chief financial officer, Harald Wilhelm, during an analyst call on April 21 after the automaker reported its results for the first quarter.

There is quite a high number of blocked vehicles a part of that will be turned around but there will be new ones coming. While the company’s high pricing strategy is in part based on product scarcity, it could have sold more vehicles in the first quarter without pushing prices down,” said the CFO.

According to the CFO, it’s a huge shame that the global computer chip shortage puts a constraint further adding that raw materials shortage also contributed to the production disruption in the first quarter.

Around half of the 1 billion euros ($1.1 billion) registered in headwinds in the first quarter were due to raw material price increases, with the rest split between energy and logistics costs and the inefficiencies of needing to stop and start production amid supply chain troubles,” added the CFO.

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