German luxury automaker Mercedes-Benz (OTC) announced on Friday that its third-quarter earnings in the core car division plummeted by 64%, as Chinese consumers continued to reduce spending on luxury goods amid a weakening economy.
“The Q3 results fall short of our expectations,” stated CFO Harald Wilhelm.
The earnings for July to September were impacted by costs related to model updates and challenging market conditions, particularly for the new versions of the G-Class SUV, set to launch next quarter, the company noted.
Mercedes anticipates annual car sales will be slightly below last year’s figures, with fourth-quarter.
Adjusted earnings before interest and taxes (EBIT) in the car unit fell to 1.2 billion euros ($1.30 billion), compared to LSEG’s average estimate of a 3.6% decline to 3.19 billion euros.
This announcement follows the company’s two downward revisions of its full-year profit margin target during the third quarter, joining a growing number of European competitors attributing declining profits and margins to a faltering Chinese car market.
CEO Ola Kaellenius has cautioned that Chinese consumers are currently very hesitant about making significant purchases, as ongoing economic weaknesses and a local real estate crisis create substantial uncertaint y.($1 = 0.9242 euros).
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