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Published on October 27th, 2012 | by Daniel Sherman Fernandez

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Mercedes Losing Sales To Audi and BMW Globally….But….The New S-Class Is Coming

Daimler lowered its 2012 earnings forecast and scrapped profit targets for next year amid declining demand in Europe and increased competition in China. The parent of Mercedes-Benz forecast full-year earnings before interest and taxes (EBIT) will fall 11 percent to 8 billion euros ($10.4 billion), after a previous target of matching last year’s 9 billion euros.
The automaker also said on Wednesday it will no longer reach 2013 operating margin goals because of toughening market conditions.The company said Mercedes new-car sales rose by 2 percent to 345,400 in the third quarter. VW, Audi’s parent company, on Wednesday kept its goal of matching last year’s operating profit, while BMW, which reports earnings Nov. 6, forecasts a 2012 gain in pretax profit.
Daimler lowered its full-year earnings outlook for its divisions, with all units now forecast to remain below last year’s level. The car business is expected to contribute 4.4 billion euros in profit compared with 5.19 billion euros a year earlier. The EBIT in the trucks unit will fall to about 1.7 billion euros from 1.88 billion euros in 2011. Daimler scrapped its 2013 profitability goals, which aimed to achieve a 10 percent operating margin in the Mercedes cars division and an 8 percent return on sales at the trucks unit. “The group assumes that the targets will not be met until a later date but continues to pursue them vigorously,” the company said.

Daimler expects increased car sales in the fourth quarter on rising demand for its new A and B-class models. Earnings will be subdued by spending on the Chinese dealer network, the company said.

Mercedes has been trailing in China, where deliveries edged up 6.7 percent this year, compared with gains of more than 30 percent for BMW and Audi. To improve its fortunes, Zetsche combined two separate sales units one for imported vehicles and one for locally made cars into a single entity. Daimler said the proportion of operating profit to revenue in the Mercedes-Benz division sank to 6.4 percent in the third quarter compared to 8 percent a year earlier. Daimler aims to regain the No. 1 position in the luxury car segment by the end of the decade after falling to third last year behind No.1 BMW and No. 2 Audi. To catch up, Mercedes plans to introduce 10 models by 2015, including new variants of the flagship S class. The company targets sales of 1.6 million Mercedes brand cars by 2015, some 25 percent more than last year.


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