For the second time this year, Daimler, the parent company of Mercedes-Benz, has cut its earnings target. The announcement highlights Mercedes' recent struggles to match rivals BMW and Audi in terms of global sales.
Chief Executive Officer Dieter Zetsche originally outlined plans for Mercedes-Benz to achieve a 10 percent profit margin on sales by the end of 2013, but has now pushed back that target to at least 2014. Meanwhile, Volkswagen-owned Audi exceed that goal during the third quarter of 2012 and remains well ahead of Mercedes in the global luxury sales race.
BMW, which currently holds the No. 1 luxury spot, says its profit margins are at the "upper end" of a range of 8 percent to 10 percent. BMW will release its official third quarter results early next month.
"In light of the relative strength of VW and BMW, I'm simply shocked by the weakness of Daimler," Arndt Ellinghorst, a London-based analyst with Credit Suisse, told The Detroit News. "The management of Daimler is disappointing once more."
Mercedes' outlook has been hampered by poor results in China and a slow rollout of vehicles at the lower end of the segment. Mercedes' aging S-Class is also failing to lure buyers of high-end luxury cars.
"We have one of the oldest product portfolios compared to the competition," Chief Financial Officer Bodo Uebber said Thursday. "We can't catch up this year to BMW and Audi."
In order to stem its losses, Daimler is looking to cut cost by 2 million euros by 2014 through its new "Fit for Leadership” initiative. Daimler will realize those savings through cutting costs associated with materials and production, as well as research and development.
Mercedes hopes to sell 1.6 million vehicles worldwide by 2015, which would be a 25 percent improvement over the company's 2011 sales figures.