BUSINESS: Mercedes-Benz Group AG lowered its financial forecasts, citing a sharp drop in the Chinese market. The luxury automaker now estimates that its main auto division’s adjusted profit will fall to 7.5 percent to 8.5 percent, down sharply from its previous forecast of 11 percent, Bloomberg reports. The company’s statement late Thursday cited China, its biggest market, as a major cause for concern. Sales of high-end models such as the S-Class and Maybach sedans have fallen significantly, with wealthy buyers shying away from purchasing them.
According to the report, Mercedes-Benz attributed the forecast adjustment to “further deterioration in the macroeconomic situation, particularly in China,” including “weak consumption as well as the ongoing slowdown in the real estate sector.” The development is part of a broader trend that is hitting German automakers grappling with a shift toward electric vehicles and declining profits in the Chinese market. Volkswagen AG recently ended a long-standing collective bargaining agreement and is considering plant closures in Germany due to declining demand. BMW AG also cut its full-year profit forecast, citing similar challenges in China and slowing electric vehicle sales.
