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Daimler's growth to slow as China cools

Thursday, February 04, 2016 - 01:26

Daimler AG expects slower sales growth for its Mercedes-Benz cars in China this year after a surge in demand in 2015 that helped the automaker post record sales and earnings. Sonia Legg reports.

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2015 was a bumper year for Daimler - and it's proposing its highest ever dividend of 3.25 euros per share. But that's unlikely to be repeated in 2016. The German luxury car maker is predicting slower sales for its Mercedes Benz cars. Dieter Zetsche is CEO. (SOUNDBITE) (German) DAIMLER CEO, DIETER ZETSCHE, SAYING: "We are looking very positively at the year in China. The market forecast is for 8 percent growth (in China) and we believe we can achieve market share gains." A growing middle class helped boost sales in China by 41 percent in 2015. And adjusted earnings before tax were up 36 percent. But 2016 is looking rather different, says CIBC's Jeremy Stretch (SOUNDBITE) (English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING: "Yes we are seeing a gradually more wealthy middle class emerge in China but it does beg the question will they continue to buy and purchase cars at the same rate so I think we will see a deceleration in immediate growth compared to past levels." The results were worse than markets expected. And shares fell more than four percent to their lowest level in a year. But Daimler has other irons in the fire. (SOUNDBITE) (English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING: "They do get some fairly significant model launches in the current year which may well offset any concerns we have about the rate of growth in the Chinese car market." The current economic climate had one other advantage too. Currency headwinds should slow in 2016.

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Daimler's growth to slow as China cools

Thursday, February 04, 2016 - 01:26