Mercedes-Benz reported a sharp 64% drop in third-quarter earnings for its core car division, undershooting analysts’ expectations.
The premium automaker cited weaker demand in China, where a slowing economy and real estate crisis have significantly dampened luxury purchases.
“The Q3 results do not meet our ambitions,” CFO Harald Wilhelm acknowledged, stating that the company plans to intensify cost-cutting measures.
In addition to reduced demand, the July-September earnings were impacted by costs related to a model revamp, particularly for new versions of the G-Class SUV slated for release next quarter.
CEO Ola Kaellenius explained the cautious sentiment among Chinese consumers, attributing it to the ongoing economic downturn and uncertainty sparked by local real estate issues.
In response to the shifting market, Mercedes-Benz revised its full-year profit margin target twice in the third quarter. The company now joins other European automakers struggling to maintain profits as the Chinese market’s appetite for high-end vehicles cools.
The financial challenges arise amid continued trade discussions between Brussels and Beijing over proposed tariffs on Chinese electric vehicle (EV) imports to Europe.
This potential measure has raised concerns of retaliation that could impact Europe’s automotive sector, which relies heavily on the Chinese market. Mercedes-Benz, whose top shareholders include China’s Beijing Automotive Group Co Ltd and Geely Chairman Li Shufu, has expressed opposition to the tariffs.
The automaker has urged the European Commission to delay their implementation, advocating for more time to negotiate a diplomatic resolution.
Boluwatife Enome
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