Premium and mass-market carmakers have looked to fast-growing markets such as China to make up for sluggish sales growth in Europe, although China’s car market, the world’s biggest, is seen cooling this year due to rising fuel prices and tighter rules on car registrations.
Year-on-year wholesale vehicle sales growth of Daimler’s luxury Mercedes-Benz cars in China tumbled to eight percent in the second quarter from 82 percent in the first.
“Demand for cars in the major emerging markets of China, India, Brazil and Russia will probably continue to grow. But rates of growth in China and India are likely to be distinctly lower than last year,” Daimler said on Wednesday.
Chief Executive Dieter Zetsche last month warned of growing economic risks in emerging markets that could cause the auto industry’s growth engine to sputter.
Daimler, which also makes Smart cars, reported stronger-than-expected operating results for the second quarter, partly thanks to strong sales of vans and buses, and gave an upbeat outlook for the full year.
Its shares were down 0.8 percent at 51.4 euros by 09:32 a.m. British time, compared with a 1.7 percent lower STOXX Europe 600 Automobiles & Parts index .
“Even though profits came in strong, Daimler’s sales have disappointed. And in the very demanding car sector, that’s enough to send the shares down,” a trader said.
French carmaker PSA Peugeot Citroen’s warning early that the Japanese earthquake in March would hit profit was also weighing on Daimler shares, traders said.
Emerging markets have generated almost three quarters of world growth over the past two years, but there is rising concern that inflation in China, the world’s second-largest economy, could prompt a slowdown in emerging markets across the board.
Daimler’s comments on emerging markets chimed with Peugeot, which earlier pared its forecast for growth in China to around 7 percent, from a previous forecast of 10 percent.
Peugeot boosted its forecast for the Latin American market and said the Russian market would grow by about 30 percent, more than twice as fast as it previously had expected.
The Russian car market has been recovering rapidly from the global economic crisis, helped by a twice-extended scrappage scheme, and is on track to become Europe’s biggest car market.
Daimler’s second-quarter earnings before interest and tax (EBIT) rose 23 percent to 2.58 billion euros (1.4 billion pounds), which beat an average estimate of 2.49 billion euros in a Reuters poll.
But revenues increased by only about 5 percent to 26.34 billion euros in the period, missing an average estimate of 27.99 billion in a Reuters poll.
Still, analysts said they believed that the second half of this year could bring fresh growth for Daimler.
“We’re optimistic. Mercedes has some important model launches during the course of 2011 and should see capacity utilization benefits from new SUVs and new small cars heading into 2012,” Bernstein analyst Max Warburton said.
Daimler said it now expects 2011 EBIT to very significantly exceed the year-earlier level. Analysts on average see 2011 group EBIT at 9.15 billion euros, up almost 26 percent from a year earlier.
