Shares of German carmaker Mercedes-Benz fell the most in four years on Friday after a deepening slowdown in China prompted the world’s largest luxury carmaker to cut its outlook.
The group’s shares fell 8.4% in Frankfurt, the biggest daily drop since 2020. The group warned that it faces a decline in its profits this year due to a decline in Chinese demand.
In a related context, BMW shares fell by 4.4%.
The economic downturn in China has particularly hurt sales of Mercedes’ most expensive models, such as the S-Class and Maybach sedans.
Mercedes has cut expectations for its core automotive unit, now seeing adjusted earnings of between 7.5% and 8.5% this year, compared with a previous forecast of 11%.
Mercedes-Benz CEO Ola Kallenius said on Friday that his group is planning a sales campaign in China with new products.
Mercedes’ profit forecast cut is a fresh setback for the group and another warning sign for the German automaker, which is struggling with a bumpy transition to electric cars and headwinds in China.
German carmaker Volkswagen earlier this month scrapped a decades-old labor agreement and may close its factories in Germany for the first time due to falling demand.
BMW, for its part, last week lowered its full-year earnings guidance, citing the recession in China and slowing sales of electric cars.
While business in China is slowing, sales in Europe are also under pressure. Mercedes deliveries across the region fell 13% in August and are down 3% in the first eight months of the year.
Slumping electric car sales are undermining Mercedes’ efforts to meet European Union emissions rules that will be tightened next year, exposing the industry to billions of euros in fines.
