The Mercedes-Benz Group beat analysts’ forecasts Friday for annual profits of 20.5 billion euros ($21.80 billion), but the premium automaker warned of lower profits this year because of economic uncertainty.

The company’s forecast coincides with industry-wide warnings of a tough year ahead. The German Association of Automobile Manufacturers predicts that car sales this year will be about 74 million units worldwide, up 4 percent from last year but still 8 percent below pre-pandemic levels.

The company met its forecast for adjusted sales profitability in the auto division at 13%-15%, reporting a profit margin of 14.6% in 2022.

In 2023, however, the company is projecting a lower adjusted profit margin of 12%-14% on passenger car division sales, and group profits are slightly below 2022 levels, even though Mercedes-Benz Cars division sales are expected to be at the same level.

Given rising production costs, we are pleased that Mercedes is betting on cost rather than volume, and is planning low volumes in 2023 to protect pricing.

The company is sticking to its goal of reducing costs by 20% by 2025 from 2019 levels.