Daimler third-quarter hit by Germany slump

FRANKFURT -- Daimler said customer demand remains strong even as a regulatory crackdown on diesel cars and a 13 percent sales slowdown for Mercedes-Benz cars in Germany weighed on third-quarter earnings.

Quarterly earnings before interest and tax (EBIT) fell 27 percent to 2.49 billion euros ($2.85 billion), hit by a 35 percent EBIT fall at Mercedes-Benz Cars to 1.37 billion euros.

"The automotive industry and thus also Daimler are still in a very challenging environment. The continued high demand from our customers makes us confident for the fourth quarter," CEO Dieter Zetsche said in a statement.

Daimler last week said its full-year operating profit would fall by over 10 percent because of "government proceedings and measures in various regions" in what amounts to the company’s second profit warning in four months.

Negative spillover from a new European Union emissions testing regime caused higher inventories. This is expected to normalize toward the end of the year.

Germany’s transport ministry has also ordered a mandatory recall of 774,000 diesels in a crackdown on pulluting cars.

Daimler, like rival BMW, also is exposed to higher trade barriers between the U.S. and China. Both ship SUVs from U.S. plants to China.

Rattled Chinese consumers are delaying purchases of big-ticket items, leading Volkswagen to lower sales forecasts for its biggest market.

On a more promising note, cooperation talks with largest shareholder Li Shufu have started bearing fruit with a planned premium ride-hailing joint venture in China to challenge market leader Didi Chuxing in the world’s most populous country.

Bloomberg contributed to this report

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