By Geoffrey Smith
Oh Lord, won’t somebody buy a Mercedes-Benz?
The troubles affecting Europe’s automakers are on full display Friday, as both Mercedes parent Daimler (DE:DAIGn) and France’s Renault (PA:RENA) reported falling sales in the first quarter.
The German company sold 7% fewer vehicles in the first quarter than it did a year earlier, with declines in all three of its most important regions – China (3%), Europe (4%) and the U.S. (9%). Earnings before interest and tax slid 16% although, at 2.8 billion euros ($3.1 billion), they still beat consensus forecasts by nearly 10%.
Even though outgoing Chief Executive Dieter Zetsche reaffirmed the company’s full-year outlook, the company’s shares were still down 0.3% on the news. That was lagging the local Dax index, which was broadly unchanged.
The benchmark Euro Stoxx 600 index was also flat, losing 0.12 points – less than 0.1% to 390.02. The U.K. FTSE 100 was down 0.2%.
Daimler is facing a steep rise in investment obligations as it migrates to electric vehicles, along with its German peers Volkswagen (DE:VOWG_p) and BMW (DE:BMWG). The three are all facing the prospect of fines from the European Commission for colluding to keep sub-optimal diesel engines on the road when they had better technology available to deploy.
Renault has problems of a slightly different nature, most obviously in the enormous distraction created by the criminal charges against its long-time CEO Carlos Ghosn. The Wall Street Journal is reporting Friday that the French company is preparing to propose a merger with Nissan, its Japanese partner, hoping to restore a relationship that has been badly strained by the Ghosn affair.
Renault's greater exposure to emerging markets such as Turkey and Argentina has hurt it in recent months, and like its European rivals it has had to abandon hopes of making money in Iran in the wake of President Donald Trump’s decision to tighten sanctions on the country.
Renault’s sales were down 5.6%, although it eked out a 2% gain in Europe, its most important market. As a result, its shares outperformed the local CAC 40 index, rising 1.7%.
Europe’s other carmakers such as Volvo (OTC:VLVLY) and Peugeot (PA:PEUP) have also reported weak first quarters.