Mercedes-Benz plans to trim production of the S-Class because of weak sales in Europe and China.
Just days after saying that the company would miss its profit forecast for the third and fourth quarters, Daimler AG said it would trim production at its largest plant to help contain costs.
After Daimler CEO Dieter Zetsche said that the company would look for $1.3 billion in cost savings, the company told Reuters that it would cut back on production at its largest plant in Sindelfingen, which makes the company’s C-, E- and S-Class cars.
Zetsche said that deteriorating market conditions in Europe and China were leading to lower demand for its Mercedes-Benz passenger cars. But the company also said there were other factors affecting demand.
Mercedes will trim production at its largest plant in Sindelfingen because of weak demand for its products.
The German Stuttgarter Zeitung newspaper reported that the C-, E- and S-Class cars were all in unfavorable stages in their lifecycles, with the high-profit S-Class doing particularly poorly.
Mercedes will bring out a new S-Class next year, the E-Class will get a refresh in the spring and the C-Class will renewed in two years.
The Sindelfingen plant is Daimler’s largest, employing 23,000 workers. The company is also dealing with labor issues at the plant, where a mediator has been brought in to handle the dispute.
Zetsche warned last week that Daimler would miss its profit targets for the third and fourth quarters.
A major part of Daimler’s problem is in China where Zetsche blames a weak local sales organization for poor sales. China sales grew only three percent last month, whereas BMW sold 38 percent more cars and Audi ‘s increased by 24 percent.
Click here to read more about Daimler’s expectations for declining profits.