Luxury Brands Show Weakness in Front of the European Crisis image

The European crisis has begun affecting the luxury brands too, and Daimler and Porsche are the solid proof to this.

Germany-based Daimler already announced that Mercedes’ operating profit will fall this year, lower than the previous year and Porsche will manufacture with 155,000 vehicles less than the previous target set for this year. Until now Daimler, BMW, Audi and Porsche managed to remain stable in front of the European crisis, compared with Fiat, Renault and Peugeot.

The luxury brands have been relying on their home market, China and the US, but now that Germany shows signs of weakening, the automakers’ sales begin to decrease.

“If a downturn lasts for longer, which this one is, premium is not immune from pricing trends,” said Arndt Ellinghorst, a London-based analyst. “The pricing environment in Europe is the biggest problem,” with incentives spreading from Italy, Spain and France to Germany.

In August auto sales in Europe fell 8.5%, the biggest decline since February, and analysts predict that this year will be a 17-year low. In Germany car sales dropped 4.7% in August and 0.6% from January to August. Dealers in Germany have already begun to offer discounts of as much as 12.1% off the sticker price, the biggest discount in more than a year.