Mercedes-Benz shares fell the most in four years after a deepening slowdown in China prompted the world’s biggest luxury-car maker to cut its outlook.
The stock slid as much as 8.4% in Frankfurt, the steepest intraday decline since 2020. Mercedes’ profit warning weighed across the sector, with BMW falling 4.4%.
The deepening rout in China has particularly hurt sales of Mercedes’ most expensive models like the S-Class and Maybach sedans.
The manufacturer cut expectations for its main cars unit and now sees adjusted returns between 7.5% and 8.5%, compared with an earlier forecast of as much as 11%.
Earnings before interest and taxes will be “significantly below” the prior year level.
Mercedes is planning a sales offensive in China with new products, Chief Executive Officer Ola Källenius said Friday on a call with analysts.
The profit warning is a setback for Mercedes’ push further upmarket and yet another warning sign for Germany’s marquee industry, which is struggling with a bumpy transition to electric cars and headwinds in China.
Volkswagen this month scrapped a decades-old labor pact and may close factories in Germany for the first time due to lagging demand.
BMW last week cut its full-year earnings guidance, held back by the China downturn and sluggish EV sales.
Separately, the company is recalling more than 520,000 vehicles in China over a wheel speed sensor that can potentially malfunction in hot and humid conditions, affecting functions for body stability and the anti-lock braking system, China’s State Administration for Market Regulation said Friday.
Models affected include imported A-Class and B-Class models made between 2011 and 2019.
The profit cutbacks undermine Mercedes’ strategy of selling more of its most luxurious vehicles to boost profitability.
China’s macroeconomic environment has deteriorated further, driven by the persistent downturn in the real estate sector, the company said.
“China is turning into a nightmare,” Oddo BHF analysts wrote in a note, with risk of yet deeper problems as consumers in the country shift to EVs and away from high-margin S-Classes.
The company’s latest EVs have met with a tepid response from consumers in Asia’s powerhouse economy and elsewhere.
Younger drivers in China are increasingly turning to homegrown brands that are perceived to have more advanced in-car digital and entertainment technology.
While business in China is sliding, sales in Europe are also under pressure.
Mercedes deliveries across the region slumped 13% in August and are down 3% during the first eight months.
Cratering EV sales are undermining carmaker efforts to meet European Union emissions rules that will tighten next year, exposing the industry to billions of euros in fines.
Economy Minister Robert Habeck is holding an industry summit in Berlin Monday to discuss ways out of the current crisis.
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