Mercedes-Benz has warned that its profits will be “significantly” lower this year as the German carmaker battles a steep drop in demand.
The warning came as the Stuttgart-based company reported that net profits fell 28 per cent to €10.4bn last year, after the group was forced to offer steep discounts to entice buyers. Revenues dropped 5 per cent to €146bn.
The gloomy outlook comes after Mercedes-Benz cut its profit forecast twice last year as the European market stagnated and a fierce price war in China eroded its earnings. Mercedes-Benz said on Thursday that the “market environment remains challenging”.
Mercedes-Benz, which also makes vans, said profits at its car division slumped 41 per cent last year and pinned some of the blame on its efforts to support sales in China.
Germany’s carmakers are contending with a slowdown in China and an uncertain outlook for electric vehicle sales in Europe. Last week rival Porsche announced 1,900 job cuts amid weak demand for its electric models.
Shares in Mercedes-Benz dropped almost 3 per cent in early trading in Frankfurt.