FRANKFURT (Bloomberg) -- Daimler said the western European car market is set to improve in the coming months, as a six-year slump in the region shows signs of ending.
"Falling demand for cars seems to have bottomed out in western Europe," the company said today in a statement. "A gradual improvement of the market situation is to be anticipated in the second half."
The prospects for a turnaround in industrywide sales adds to high demand for new models such as the Mercedes-Benz CLA compact and a new generation of the top-of-the-line S class. Daimler is counting on these cars to propel "significantly" better profit in the second half compared with the first, the company said, reaffirming past comments.
Backed by new models, Daimler also expects to grab market share in the second half, CEO Dieter Zetsche said today. The better sales prospects come as the company's cost-cutting efforts proceed better than it previously anticipated, Zetsche added.
"Profits have already improved and the majority of the planned savings are expected in the second half of the year," said Daniel Schwarz, a Frankfurt-based analyst with Commerzbank. "This gives increased confidence that the earnings will improve sequentially in the coming quarters."
The boost in profits in the second half won't totally offset a weak first six months. Daimler reiterated that full-year earnings before interest, taxes and one-time items will decline from 2012's 8.1 billion euros ($10.7 billion) on weaker profit at Mercedes. Daimler's second-quarter Ebit more than doubled to 5.24 billion euros, lifted by 3.21 billion euros in proceeds from the sale of shares in the parent of planemaker Airbus SAS, the company said, reiterating figures released July 12.
Sales in the period advanced 3 percent to 29.7 billion euros. Net income at the company, which is also the world's largest maker of heavy-duty trucks, surged to 4.58 billion euros from 1.57 billion euros a year earlier.
'No complacency'
"This represents progress in our earnings development, but no cause for complacency," Zetsche said in today's statement. "We will continue to work hard on achieving our goals."
Mercedes, which intends to retake the lead in premium car sales by the end of the decade, failed to close the gap to rivals in the first half. Car sales increased 6 percent to 694,433 cars and SUVs.
Deliveries of BMW's namesake brand advanced 8 percent to 804,248 vehicles. Sales of Audi vehicles rose 6 percent to 780,500.
Spending by the Daimler passenger-car unit to roll out new models contributed to a drop in profitability in the second quarter. The operating profit margin fell to 6 percent from 9 percent a year ago.
Zetsche last year postponed a goal of earning 10 percent margins from cars to 2014 at the earliest -- four years later than originally planned. To help reach that target, the division, which is run by the Daimler CEO, plans to lower spending by 2 billion euros by the end of next year, under a savings program dubbed "Fit for Leadership."
