Daimler issues profit warning over Chinese tariffs
Daimler, the owner of Mercedes-Benz, said in a release that it expects fewer than expected Mercedes-Benz SUV sales and higher than expected costs because of the increased import tariffs for US vehicles into the Chinese market.
The warning comes as China plans retaliatory tariffs against the US after the Trump administration decided to slap tariffs on at least $50 billion of Chinese imports.
“From today’s perspective, the decisive factor is that, at Mercedes-Benz Cars, fewer than expected SUV sales and higher than expected costs – not completely passed on to the customers – must be assumed because of increased import tariffs for US vehicles into the Chinese market,” Daimler said.
“This effect cannot be fully compensated by the reallocation of vehicles to other markets.”
Daimler has a large production presence in the US. Many of its vehicles produced in the US are exported to the Chinese market. According to Daimler, over 70% of SUV’s made at its Alabama plant are exported, making Mercedes-Benz U.S. International, Inc. the second largest automotive exporter in the U.S.
Mercedes-Benz recorded record sales in the first three months of this year. The increase was led by a 17% rise in sales in China.
Daimler said that earnings from car sales this year are expected to be “slightly below the previous year”. This is in part because of the import tariffs for US vehicles into China, but also due to declining demand in Latin America and the recall of diesel vehicles.