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Declining Sales In Europe And China Impact Mercedes' 2012 Profits


2013 Mercedes-Benz G Class

2013 Mercedes-Benz G Class

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Yesterday we told you that Porsche would be reducing both production and spending in 2013, as it projected zero growth over 2012 sales. Now comes word from Mercedes-Benz that it, too, is facing challenges related to the cooling global economy.

As Automotive News Europe (subscription required) explains, Daimler, parent to Mercedes-Benz, has revised profit expectations from Mercedes downward for 2012. Blaming a declining automotive sales market in Europe and China, Mercedes CEO Dieter Zetsche said the company was “gearing up for a challenging environment.”

That environment includes 2012 profits that will likely fall below those earned in 2011. Second half projections now anticipate earnings less than the 2.57 billion euros realized in the first half, meaning that earnings targets for 2012 will be missed by somet 60 million euros (about $78 million).

Zetsche attributes the decline to a deteriorating environment in Europe, coupled with greater competition in China. European car sales were off by some 8.5-percent in August, while both demand for large luxury cars and realized prices are falling in China.

To offset decreasing earnings, Mercedes is implementing a cost-reduction plan it calls “Fit for Leadership,” but it isn’t clear what that strategy entails or how much money the brand expects to save.

With forecasts from Mercedes and Porsche revised downward, we’ll bet there’s some anxiety in Audi and BMW boardrooms these days, too.
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