German premium car maker Mercedes-Benz reported a 64% drop in third-quarter profit, as Chinese consumers continued to cut spending on luxury goods, according to Reuters.
CFO Harald Wilhelm stated that the group would intensify its cost cutting.
The Q3 results do not meet our ambitions.
Profit for July-September was impacted by model refresh costs as well as difficult market conditions, especially for new versions of the G-Class SUV.
Revenue from industrial business for the quarter reached 2.39 billion euros ($2.59 billion), up 2% year-on-year. Adjusted earnings before interest and taxes (EBIT) fell to €1.2 billion, compared to the average LSEG estimate of a 3.6% drop to €3.19 billion.
Mercedes-Benz CEO Ola Källenius warned that Chinese consumers were extremely cautious when making large purchases. He linked this to the local property crisis and uncertainty among consumers.
The company cut its full-year profitability target twice in the third quarter. It also blamed a weakening Chinese car market for the drop in profits and margins. In a separate challenge, negotiations between Brussels and Beijing over looming duties on imports of Chinese electric vehicles (EVs) into Europe could be a challenge as European auto makers fear retaliatory measures.
Mercedes-Benz described the tariffs as a “mistake,” calling on the European Commission to delay their introduction to allow further talks on the deal.
