(Reuters) -German premium automaker Mercedes-Benz on Friday said third-quarter earnings in the core car division plunged by 64% as Chinese consumers continued to cut back on luxury goods off the back of a weakening economy.
“The Q3 results do not meet our ambitions,” CFO Harald Wilhelm said in a statement.
The July-September earnings were hit by model revamp costs as well as a tough market, especially for new versions of the G-Class SUV, which will roll out in the next quarter, Mercedes added.
It sees annual car sales slightly below the previous year, and the fourth-quarter sales in line with Q3.
Adjusted earnings before interest and taxes (EBIT) in the car unit dropped to 1.2 billion euros ($1.30 billion) versus LSEG’s mean estimate of a 3.6% drop to 3.19 billion euros.
The news comes after the premium carmaker cut its full-year profit margin target twice during the third quarter, joining a growing number of European rivals blaming a weakening Chinese car market for falling profits and margins.
Mercedes-Benz CEO Ola Kaellenius has warned that Chinese consumers are extremely cautious at present about big purchases, as long-standing economic weakness compounded by a local real estate crisis has created considerable uncertainty for consumers.
($1 = 0.9242 euros)
(Reporting by Andrey Sychev, Editing by Rachel More)
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