Daimler’s trials and tribulations should be a warning to those automakers who are too gung-ho about the Chinese market. The market is big, but it can hurt big when there are Chinese constipations. Daimler has been falling behind in China while its Bavarian competition by Audi and BMW racked-up double digit gains in the Middle Kingdom. Promptly, the Chinese flu affected the whole body. Says Reuters:
“German automaker Daimler said it expected flat earnings this year as a persistently weak market and an ageing model line-up sap demand for its luxury cars and trucks until the second half.
Daimler executives admit profits would have been better were it not for the underperformance of Mercedes in China, a vital growth market where its two local rivals have been running circles around it.”
Daimler prepares for a bad first quarter, but has high hopes on a revamped S-Klasse, along with a 600 million euros savings program.
Last Friday, Daimler bought 12 percent of its Chinese joint venture partner BAIC Motor in a deal ahead of BAIC’s planned stock offering. That operation at least promises to deliver extraordinary earnings when BAIC Motors goes public.