German premium carmaker Daimler is likely to cut its profit expectations for the year, after it said on Wednesday that its core European markets continue to weaken.
Daimler has fallen far behind German rivals BMW and Audi due to deep-seated problems in China, and the latest profit warning is another dent in the credibility of chief executive Dieter Zetsche, whose contract extension in February nearly ended in a boardroom coup.
"Not much tailwind is anticipated from the markets in the coming months. For Europe in particular, there are no signs of a trend reversal," Mr Zetsche told the annual shareholders meeting, adding Daimler would reassess whether its previous assumptions for 2013 were still valid.
Daimler said on February 7 that it expected flat earnings in 2013 as a persistently weak market and an ageing model line-up would sap demand for its luxury cars and trucks until the second half of the year.
The warning echoes Tuesday's bearish comments from Italy's Fiat, a mass-market maker that also owns the upscale Alfa Romeo, Maserati and Ferrari brands. The company's chief executive Sergio Marchionne said the company's losses in Europe could be worse than expected this year, among estimates that the western European market shrunk by roughly 10 per cent in the first quarter.
First-quarter vehicle deliveries showed that Daimler's flagship Mercedes-Benz luxury-car division keeps lagging BMW and Audi, with sales shrinking in Europe and China.
Analysts have repeatedly questioned whether Mercedes can achieve its goal of overtaking its two German rivals to become the world's largest luxury carmaker by 2020 so long as its sales growth in China continues to undershoot theirs.
Still, Daimler said second-half group results may improve on the first six months, citing momentum from new model launches and a package of cost-cutting measures.
"Daimler will provide further information regarding market and earnings expectations for the group and its divisions for the full year in the first-quarter reporting," he added.
* Reuters
