Andrei Shchev
(Reuters) – German luxury carmaker Mercedes-Benz on Friday reported a 64% drop in third-quarter profit at its core auto division, as Chinese consumers continued to hold back on luxury purchases amid the economic downturn, and analysts reported a 64% decline in third-quarter profit. The list was announced to be significantly lower than expected.
“The results for the third quarter did not meet our targets,” Chief Financial Officer Harald Wilhelm said in a statement, adding that the group would step up its cost-cutting efforts.
Mercedes added that revenue in the July-September period was hit by model refresh costs as well as a tough market, particularly for the new version of the G-Class SUV that will be launched next quarter.
Auto sales for the year are expected to be slightly lower than last year, with fourth-quarter sales expected to be similar to the third quarter.
A rare bright spot in the results was continued cash flow generation from industrial operations, which rose 2% year-on-year to 2.39 billion euros ($2.59 billion) in the quarter.
Automotive’s adjusted earnings before interest and tax (EBIT) fell to 1.2 billion euros, compared to the average LSEG forecast of 3.6% lower to 3.19 billion euros.
China’s predicament
Mercedes-Benz CEO Ola Källenius says Chinese consumers are reluctant to make big purchases as years of economic weakness and the local real estate crisis create great uncertainty for consumers. warned to be extremely cautious.
The luxury carmaker lowered its full-year profit margin target twice during the third quarter, joining a growing number of European rivals in blaming a weak Chinese car market for lower profits and margins. .
The results were announced amid ongoing talks between Brussels and China over impending tariffs on imports of Chinese EVs into Europe, and the decision comes as talks between Brussels and China continue over impending tariffs on imports of Chinese-made EVs into Europe. It’s giving me a headache.
Mercedes-Benz, which counts China’s Beijing Automobile Group and Geely Automobile Chairman Li Shufu as its two largest shareholders, called the tariffs a “mistake” and said it would delay them to allow for further talks towards a deal. requested the European Commission.
(1 dollar = 0.9240 euro)
(Reporting by Andrei Shchev; Editing by Rachel More and Sonali Paul)
