The Mercedes-Benz maker Daimler has become the first major company to issue a profit warning after being hit by the escalating trade war between the US and China.
The German carmaker said on Wednesday night that it expected profits this year to be “slightly below the previous year’s level”. It had previously pencilled in a slight rise.
In a tit-for-tat response to the US moves, Beijing announced 25% import tariffs on $50bn of US products last week, including cars, which kick in on 6 July, following a similar move from Donald Trump. He threatened further tariffs on $200bn of Chinese goods in retaliation.
Daimler makes Mercedes SUVs in the US and ships them to China, its biggest market. BMW, which has large factories in the US, is also likely to be affected by the trade war.
Shares in Daimler fell 3.3% on the Frankfurt stock exchange, while BMW lost 2.7% and Volkswagen 1.3%.
Daimler sold record numbers of Mercedes cars in the first three months of the year, up 5% to 594,300 vehicles, thanks to strong demand from China, where sales increased by 16% to 178,000 cars. However, this is unlikely to last because of the trade spat, the carmaker warned.
Daimler said: “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. This effect cannot be fully compensated by the reallocation of vehicles to other markets.”
The company said sales would also be affected by the new certification process for emissions tests, which takes effect in September. It is also being hit by a previously announced recall of Mercedes diesel vans and declining demand for Daimler buses in Latin America.
