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Daimler AG (DAI), the world’s third-largest maker of luxury vehicles, forecast significant gains in second-half earnings as the western European auto market bottoms out and new models spur demand.

Backed by vehicles like the new Mercedes-Benz CLA compact four-door coupe and a new generation of the top-of-the-line S-Class, Daimler expects to grab market share in the second half, Chief Executive Officer Dieter Zetsche said today. In addition to improved sales prospects, cost-cutting efforts are proceeding better than the company had anticipated, he said.

Mercedes failed to close the gap to rivals in the first half. Car sales increased 6.4 percent to 694,433 cars and sport-utility vehicles. Deliveries of Bayerische Motoren Werke AG’s namesake brand advanced 7.7 percent to 804,248 vehicles. Sales for Volkswagen AG (VOW)’s Audi rose 6.4 percent to 780,500.

Spending by the Daimler passenger-car unit to roll out new models contributed to a drop in profitability in the second quarter. The operating profit margin fell to 6.4 percent from 8.7 percent a year ago.

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Daimler: Weak European Demand to Recover and Improve Second-Half Earnings - Investments in Products Drops Profit Margin to 6.4%

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