Mercedes-Benz reported a 64% drop in earnings for its main car business in the third quarter, falling short of what experts had predicted. Chief Financial Officer Harald Wilhelm said the decrease was due to lower demand in China, which he linked to the country’s economic slowdown and real estate issues.
“Our third-quarter results didn’t meet our goals,” Wilhelm said, and explained that the company plans to step up efforts to reduce costs. CEO Ola Kaellenius pointed out that Chinese consumers are being careful with their spending because of economic worries and local real estate problems.
The company’s earnings were also affected by expenses related to updating its car models, especially new versions of the G-Class SUV. Mercedes-Benz had to adjust its full-year profit margin target twice during the third quarter.
Mercedes-Benz is one of several European carmakers having trouble keeping profits up as the luxury car market in China cools down. Ongoing talks between Brussels and Beijing about potential tariffs on Chinese electric vehicle imports are making financial challenges even harder.
