Daimler sees the car for emerging markets cooling demand

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Automakers premium and mass market, have resorted to fast-growing markets like China to offset weak sales growth in Europe, although the auto market in China, the world's largest, is seen cooling of this year due to fuel prices and stricter rules on car registrations.

Year after year, further growth in sales of luxury vehicles of Daimler, Mercedes-Benz in China fell 8 percent in the second quarter from 82 percent in the first.

"The demand for cars in major emerging markets of China, India, Brazil and Russia will probably continue to grow. However, the growth rates in China and India are likely to be significantly lower than last year," Daimler said Wednesday.

Chief executive Dieter Zetsche, last month warned of growing economic risks in emerging markets that could cause the engine of growth in the auto industry fail.

Daimler, which also makes cars smarter, reported stronger than expected operating results for the second quarter, thanks in part to strong sales of trucks and buses, and gave an upbeat outlook for the year.

Its shares fell 0.8 percent at 51.4 euros by 9:32 a.m. British time, compared with 1.7 percent fewer cars STOXX Europe 600 index components. SXAP.

"Although earnings came in strong, sales of Daimler disappointed. And in the demanding automotive industry, that's enough to send stocks down," one trader said.

(French automaker PSA Peugeot Citroen early warning Wednesday that the earthquake hit Japan in March benefit was also weighing on Daimler shares, traders said.

CHINA, INDIA RETAIL

Emerging markets have generated nearly three-quarters of global growth over the past two years, but there is growing concern that inflation in China, the second largest economy, could lead to a slowdown in emerging markets in general.

Daimler comments intervened in emerging markets with Peugeot, who earlier cut its forecast for growth in China to nearly 7 percent from a previous forecast of 10 percent.

Peugeot increased its market forecast for Latin America and said that the Russian market would grow 30 percent, more than twice as fast as previously expected.

The Russian car market has recovered quickly from the global economic crisis, thanks to a double-scrapping scheme extended, and is on track to become the biggest European car market.

In the second quarter of Daimler earnings before interest and taxes (EBIT rose 23 percent to 2.58 billion euros (£ 1.4 billion, which exceeded an average estimate of 2.49 million euros in a Reuters poll.

However, revenue grew only 5 percent to € 26.34 billion in the period, the lack of an average forecast of 27.99 billion in a Reuters poll.

However, analysts said they believed the second half of this year could bring new growth Daimler.

"We are optimistic. Mercedes models have some major releases during the course of 2011 and should see the benefits of capacity utilization and new small car SUV ahead of 2012," said Bernstein analyst Max Warburton.

Daimler said it now expects 2011 EBIT to very significantly exceed the previous year's level. Analysts on average see EBIT group 2.011 at 9.15 million, nearly 26 percent over the previous year.

(Report

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