Daimler feels chill of Europe car slowdown

By Maria Sheahan


Car and truck makers, which have benefited from robust demand in emerging markets including Brazil and China, have warned the outlook for Europe, beset by sovereign debt woes, is gloomy, with sales set to falter.

However, data on Thursday from industry group ACEA showed the signs of cooling demand reported by truck makers had not yet filtered through to order books.

Truck sales in the European Union rose 4.5 percent in September, ACEA said.

Truck manufacturers are bracing themselves for lower demand in an industry closely linked to international trade and the health of the wider economy.

World number two truck maker Volvo <VOLVb.ST> on Tuesday said it was preparing to cut output in anticipation of lower vehicle demand in Europe next year, and warned of slowing growth in emerging regions.

Competitor Scania had earlier said it would make further production cuts if economic uncertainty led to lower orders as it posted a profit drop as expected.

Daimler said on Thursday that sales of Mercedes-Benz Cars, which also includes the Smart brand, fell 2 percent in Western Europe in the third quarter, with stagnating sales in Germany, Europe's biggest car market.

Car sales growth has been shrinking in Europe, with Germany the only major market in the region to expand in September, while the boom in China that bolstered German carmakers in recent quarters has eased to a milder pace for now.

"At the beginning of the fourth quarter of 2011, the outlook for the world economy is distinctly less favorable than just a few months ago," the company said in its quarterly financial report.

However, it reaffirmed its full-year outlook.

"Perhaps the stock will struggle today -- but we still see Daimler as an out of favor, cheap stock with durable earnings power," wrote Bernstein analyst Max Warburton in a research note. "2012 looks like it's going to be a tough year, but Daimler may well fare better than many fear," he added.

France's PSA Peugeot Citroen <PEUP.PA>, beset by gloom in European showrooms, on Wednesday warned its core car making business would barely make money this year and announced 6,000 job losses to cut costs.

Europe's largest car maker Volkswagen <VOWG_p.DE> and France's Renault <RENA.PA> report third quarter results later on Thursday.

(Reporting by Maria Sheahan; Writing by Helen Massy-Beresford; Editing by David Cowell)