Daimler in fourth profit warning of the year over airbags and diesel emissions
Daimler, the German car giant that owns Mercedes, this morning issued its fourth profit warning of the year after it unearthed fresh financial risks surrounding its diesel emissions scandal.
The car maker made a similar warning on June 23, but it has reassessed the risk of fines from court battles and government measures. These have come after it emerged it fitted some cars with illegal software that masks diesel emissions.
Read more: Daimler shares sink after third profit warning this year
It said it would make a €1.6bn (£1.44bn) loss for the second quarter. This comes after it made a €2.6bn profit in the same period last year.
The warning sent shares down three per cent in early German trading.
Daimler also said it needed to ring fence cash for a product recall. This is because of faulty Takata airbags fitted in its cars. This has led to a €1bn increase in expenses.
It said in a statement: “New information led to a revised risk assessment with regard to provisions for an extended recall in Europe and rest of world in connection with Takata airbags.
“In addition, earnings before interest and tax were impacted by a reassessment made today in connection with ongoing governmental and court proceedings and measures relating to Mercedes-Benz diesel vehicles in various regions.”
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Car makers have grappled with a diesel emissions crackdown since 2015, when Volkswagen admitted to cheating in US pollution tests.
The pressure has come when the industry is having to invest heavily in electric and self-driving vehicles. It is also struggling with slowing growth in China, weak markets in Europe and a rise in global trade tensions.
Main image credit: Getty