(Bloomberg) — Porsche AG and Mercedes-Benz Group AG are planning cost reductions after fierce competition and weaker demand for their luxury cars in China hit profits. Porsche is reviewing its model lineup after sales and earnings fell in the first nine months of the year. Earlier on Friday, Mercedes reported its lowest automaking margin in nearly three years after selling fewer expensive models like the S-Class limousine.
The German brands are struggling in the world’s biggest auto market, where local manufacturers led by BYD Co. are taking over. They’re also contending with weak demand for electric vehicles in Europe after several countries reduced subsidies.
The issues have caused a wave of profit warnings recently from automakers including BMW AG and Porsche’s parent Volkswagen AG. Mercedes’ key gauge of profitability slid to 4.7% in the third quarter, undershooting its minimum target of 8% and the lowest level since the carmaker split from its truck business in late 2021.
Porsche’s third-quarter vehicle deliveries in China slumped to their lowest level in a decade. “The Q3 results do not meet our ambitions,” Mercedes Chief Financial Officer Harald Wilhelm said Friday. “We are taking a prudent view about market evolution going forward and we will step up all efforts on further efficiency increases and cost improvements across the business.
” Mercedes’ shares declined 1% in Frankfurt. The stock is down about 8% this year. Porsche reported after the mar.
