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China demand for luxury cars on the rise

Daimler reported a 10 per cent rise in third-quarter profit, buoyed by robust demand for Mercedes-Benz luxury cars in China as the brand rolls out the new E-Class sedan.

Adjusted earnings before interest and taxes increased to €4.01 billion ($4.37 billion) from €3.66 billion a year ago, the company said on Friday.

Analysts had expected operating profit of €3.76 billion, according to the average of six estimates compiled by Bloomberg. While Daimler stuck to a forecast of earnings this year being “slightly” higher than 2015’s €13.8 billion, the company became more cautious on its expectations for sales.

Flat revenue predicted

Daimler, which is based in Stuttgart in Germany, now predicts revenue to remain flat compared with last year. The company had previously forecast a slight rise.

Daimler executives will discuss the results with analysts and investors at 2pm central eastern time.

While Mercedes-Benz is on track to overtake BMW’s namesake brand in global sales for the first time in more than a decade, the carmaker is under pressure to maintain profitability as spending to develop self-driving and electric-vehicle technologies surges.

At the same time, Daimler, also the world’s largest maker of heavy-duty vehicles, is battling with declining demand in key truck markets.

Mercedes-Benz cars

Adjusted for one-time charges such as recalling cars with faulty Takata air bags, operating profit at the Mercedes-Benz Cars division, which includes the urban-focused Smart brand, surged 23 per cent to €2.66 billion in the third quarter.

Its return on sales widened to 11.4 per cent from 10.4 per cent a year earlier.

Deliveries of Mercedes-Benz cars jumped 12 per cent in the first nine months of 2016, bolstered by a 30 per cent surge in China as sport utility vehicles like the GLC woo new buyers.

Earnings at the truck division, which cut its profit forecast in May because of lower demand in the United States and Middle East, tumbled 37 per cent to €510 million.

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