Mercedes lowers 2012 profit target amid lower earnings in Europe and China

Daimler AG has lowered the 2012 profit target for its Mercedes-Benz Cars division, amid lower earnings in Europe and China.

Earnings before interest and tax (EBIT) at the luxury cars unit are expected to fall short of last year’s level, said Daimler CEO Dieter Zetsche.

“We’re gearing up for a challenging environment. The overall environment in Europe is deteriorating, with more negative developments than expected. There is also significantly sharpening competition in China,” Zetsche said at a press conference in Stuttgart, Germany.

Earnings will be also lower in the second half of this year than in the first six months, when Daimler earned 2.57 billion euros, accounting for a drop of at least 60 million euros. Zetsche said Mercedes-Benz has already taken efficiency measures, under a program called „Fit for Leadership”. However, Daimler’s CEO didn’t offer specific details.

The European car market shrank by 8.5 percent in August from a year earlier, according to the ACEA regional trade group. Audi reported the biggest growth in Europe among luxury brands, with an 8 percent sales increase in August. Mercedes rose by 0.5 percent, while BMW posted an 11 percent drop in European registrations.

Mercedes’ results in China were weaker than its competitors’, with an 11 percent increase in deliveries in H1, versus jumps of 38 percent at Audi and 30 percent at BMW.