FRANKFURT -- Daimler blamed U.S.-China tariffs for a 30 percent drop in second-quarter profit and predicted a further decline as new WLTP emissions test standards in Europe hit sales.
Earnings before interest and tax (EBIT) fell 30 percent to 2.64 billion euros ($3.1 billion) during the quarter, weakened by Chinese price-cutting on U.S.-made Mercedes models to offset import duties, the company said on Thursday. Revenue dipped 1 percent to 40.8 billion euros.
Daimler last month blamed the U.S.-China trade tariffs when cutting full-year guidance. Rivals Fiat Chrysler and General Motors followed suit this week.
But the German luxury carmaker also cautioned that emissions-related vehicle certification bottlenecks would further dent Mercedes earnings in the current third quarter.
The Mercedes-Benz division's profit margin narrowed to 8.4 percent in the second quarter from a year-earlier 10 percent, also weighed down by a supplier fire and higher spending on autonomous and electrified vehicles.
Deliveries of Mercedes-Benz Cars fell 1 percent in the second quarter and Daimler warned that sales will be impacted further by new anti-pollution standards. "Due to challenges in the supply chain as well as a longer certification process than usual for a number of models in some international markets it will come to temporary suspensions in the availability of vehicles," Daimler said.
Despite this, the company reiterated that Mercedes-Benz Cars plans to achieve unit sales around the prior-year level thanks to further growth in the Chinese market.
“The automotive industry and therefore we too have many challenges to overcome,” CEO Dieter Zetsche said in a statement. “We plan to further strengthen and expand our position with numerous new models and technologies.”
Daimler repeated a warning that the new Worldwide harmonized Light vehicle Test Procedure (WLTP) standards taking effect in the European Union in September would lead to "some temporary restrictions in the availability of vehicles" as well as higher inventories of unsold cars.
As a result, third-quarter Mercedes earnings will be "significantly below" the 1.9 billion euros recorded in the three months to June 30, the company said on Thursday.
Customers were seeing delays because regulators no longer wave through groups of similar vehicles during certification and probe each car in a much more granular way, Zetsche said.
Daimler was not able to deliver all of the cars customers wanted because of delays in approving the vehicles for road worthiness. Customers were either choosing lower margin vehicles or needed to buy a different model, Zetsche said. "This has an impact on pricing," he added.
Challenges from the new testing regime will ease toward the end of the year, Daimler said.
The new standards have already caused a slowdown in sales for carmakers including Volkswagen, which has rented space to store some of the 250,000 vehicles that may be caught up in testing delays.
French supplier Valeo also cut its 2018 outlook on Wednesday, largely citing WLTP disruption.
Because the new tests are based on real-world driving scenarios manufacturers get higher carbon dioxide readings than under the old system, forcing some carmakers to delay road certification and sales.
Daimler warned that higher trade barriers hitting its SUVs sold in China also will lower earnings at its Mercedes cars division in the third quarter.
Bloomberg contributed to this report