Europe's car crisis has reached German luxury carmaker Daimler, which has announced it won't reach 2012 earnings targets in its car unit. Increasingly tight markets in Asia are adding to the carmaker's woes.
In 2012, the operating profit of Daimler's passenger car division would fall short of the sum it had earned in 2011, the German carmaker said in an earnings warning released Thursday.
Last year, the division - which comprises luxury brands Mercedes, Maybach and AMG, as well as Smart cars - added 5.2 billion euros ($6.74 billion) to the Daimler group's total operating profit of 8.76 billion euros.
"We experience mounting difficulties with the market situation in Europe," Daimler Chief Executive Dieter Zetsche said in a statement, adding that markets on the continent were developing "more negatively" than originally expected by the auto maker.
In addition, the competitive environment on the Chinese market was become "significantly fiercer," he said.
In July this year, Daimler's luxury car division reported the first decline in sales in three years, but reclaimed growth in August.
However, the slump in European markets has worsened in September, proving a mounting burden on the earnings of all European auto makers. After years of robust growth in Asian markets, the situation there also appears to be turning around on the back of slower economic growth in China and weaker demand for cars.
Daimler CEO Zetsche said the company was preparing a series of measures under a special program planned to be unveiled next week, and aimed at improving earnings.