July 23, 2015 / 10:56 AM / 3 years ago

REFILE-UPDATE 3-Daimler quarterly profit jump defies China slowdown

(Fixes typo in paragraph 2)

* Q2 EBIT 3.8 billion euros vs forecast 3.31 billion

* Earnings lifted by truck, car sales

* Company expects significant rise in 2015 sales, EBIT

* Mercedes-Benz Cars sees margins rise on Maybach demand

By Edward Taylor

FRANKFURT, July 23 (Reuters) - Daimler’s second-quarter operating profit jumped 54 percent to a record high, as sales of trucks and new luxury car model launches helped it defy a slowdown in China, where German rivals are struggling to maintain momentum.

Daimler sales have lagged those of Audi and BMW in the world’s biggest car market, but recent steps to take its Mercedes-Benz brand further upmarket have struck a chord with brand-conscious customers, particularly in China.

Mercedes has introduced high-grade interior designs to all its cars and vans and taken its flagship S-Class limousine further upmarket, introducing top-end models such as the Mercedes-Maybach S600 which retails for 190,000 euros ($209,000) in Europe.

In China, Daimler’s single biggest market for the S-Class, it is delivering 500 Maybachs every month, in spite of an anti-corruption push that has floored sales of other luxury cars such as Rolls-Royce.

“Some dealers are selling it for above list price,” Chief Executive Dieter Zetsche said on a call on Thursday.

Maybach models make up 20 percent of overall S-Class sales in China, where clients opt for top-of-the range versions with full leather trims and expensive options including predictive cruise control which guides a car through traffic ahead, even around corners.

Mercedes is also benefiting from the fact competitors’ top-of-line models are ageing.

“The weakness of our competitors is the product of our strength,” Zetsche said, adding Mercedes dealers in China were happy — a thinly veiled swipe at BMW which in January paid 5.1 billion yuan ($820 million) in compensation to its Chinese dealers.

BMW’s 7 series has been on the market since 2008. Volkswagen’s Phaeton is more than 12 years old and the Audi A8 is also nearing the end of its lifecycle.

Zetsche said Mercedes cars, meantime, had not yet reached their product launch “sweet spot” as the brand was working on a new version of its E-Class due to hit showrooms next year.

“We expect sales momentum to continue,” Zetsche said in response to a question about sustainability of Chinese demand.


In China, Mercedes has benefited from a scarcity value compared with Audi and BMW. Daimler only started making cars in China in 2006, while Audi, the rival with the longest presence there, has been manufacturing locally since 1988.

Last year, Mercedes sold 281,588 cars in China, compared with 578,932 for Audi. BMW said it delivered 455,979 BMW and Mini-branded passenger cars in China in 2014. Audi, BMW and Mercedes command between 70 and 80 of China’s premium market, where they earn 30 to 50 percent of their profits.

Thanks to robust Chinese demand, Daimler said its second-quarter return on sales from ongoing business at Mercedes-Benz Cars jumped to 10.7 percent in the second quarter from 7.9 percent a year before.

Global deliveries of Mercedes cars in the first half of 2015 rose 20 percent to 500,700 vehicles, helped by a 66 percent rise in demand for the C-Class, a mid-sized saloon which Mercedes lifted further upmarket with more expensive materials.

Second-quarter adjusted earnings before interest and tax (EBIT) rose to 3.8 billion euros ($4 billion), Stuttgart-based Daimler said, above the 3.31 billion forecast in a Reuters poll of analysts.

“Daimler was even stronger than high expectations,” Morgan Stanley analysts said, while autos expert Juergen Pieper of Bankhaus Metzler said: “The Stuttgarters are leaving the pack behind. That could continue for the next five or six quarters.”

Zetsche said the group expected revenue and EBIT to increase significantly in 2015, helped by the availability of a new version of its compact A-Class, as well as the GLE and GLC sport utility vehicles in September.

July will be another strong sales month for luxury cars and momentum will continue into next year as well, Zetsche said explaining this would underpin a new level of profitability.

“This is the beginning of an era and not a peak,” he said.

Daimler shares, up 21 percent so far this year, were down 1.1 percent at 1450 GMT.

$1 = 0.9095 euros Additional reporting by Jan Schwartz; Editing by Georgina Prodhan, David Holmes and Mark Potter

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