Daimler has warned of toughening conditions in a “volatile” market as it posted a slump in quarterly profits, says the Daily Telegraph.
The German car maker said it faced a “very challenging environment” as it reported group net profits for the third quarter were down 21pc to €1.8bn (£1.6bn). Sales of Mercedes cars dropped by 6% to 559,000 in the quarter.
Underlying profits fell further, down 27% to €2.5bn on revenues which were 1pc lower at €40.2bn, as total vehicle sales declined 4% to 795,000.
The company has already issued two profits warnings this year as the car industry faces declining sales caused by economic uncertainty, the prospect of a US-China trade war that could ramp up prices, and a sales bottleneck as manufacturers are unable to get vehicles certified under a new emissions testing regime.
The logjam because of a lack of testing facilities contributed to profits in the car division declining €700m to €1.4bn, with the company partly attributing this to “restrictions in the availability of vehicles caused by delays in certification”. Sales of Mercedes cars dropped by 6% to 559,000 in the quarter.
Manufacturers are unable to sell cars until they have received approval under the new WLTP testing regime brought in as a response to the VW “dieselgate” scandal where the rival manufacturer admitted fitting 11 million cars with equipment to cheat pollution measuring tests.
Mercedes is also facing costs related to a recall ordered by the German government in June of 774,000 cars said to have been fitted with illegal software which altered their pollution controls, allowing them to hide the true levels of harmful gases they pump out.
Chief executive Dieter Zetsche, who is leaving the company within the next 12 months before returning as chairman in three years’ time, warned that the “automotive industry and thus also Daimler are still in a very challenging environment”.
