Daimler, Stretched by Diesel Fines and Technology Shift, Records a Loss


FRANKFURT — The German carmaker Daimler slipped into the red at the end of 2019, battered by the cost of developing electric cars and by penalties from diesel emissions cheating.

The collapse of profit, which Daimler had warned about last month, exemplifies the challenges facing the German car industry, which may be serious enough to push the country into recession. Vehicles are the country’s biggest export, as well as an important part of the national identity.

The quarterly loss of 11 million euros, or $12 million, was relatively small compared to a profit of €1.6 billion in the fourth quarter of 2018. But it puts Daimler, the maker of Mercedes-Benz cars and trucks, in a weak position as it confronts the economic consequences of the coronavirus in China.

  • Updated Feb. 10, 2020

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Daimler and other carmakers were forced to keep their factories in China closed longer than planned after the Lunar New Year, and the virus has kept people out of showrooms. On Monday, the company said it had begun gradually ramping up production at its Chinese factories.

China has become a critical market for all of the German carmakers, and they are suffering disproportionately from the economic effects of the virus. Daimler sold nearly 700,000 Mercedes-Benz cars in China last year, more than twice as many as it sold in the United States.

“The coronavirus provides a substantial risk for the expected global recovery, as hopes were pinned on an improvement of the Chinese economy,” Stefan Schneider, an economist at Deutsche Bank, said in a note to clients on Tuesday. A recession in Germany early this year is “quite probable,” Mr. Schneider added.

Like its rival Volkswagen, Daimler also faces substantial costs from accusations that it programmed diesel vehicles to cheat on emissions tests. Daimler said on Tuesday that it had set aside €1.5 billion during the quarter, and a total of €4 billion for the year, to cover the cost of legal proceedings and penalties in Europe, the United States and other places.

The company has disclosed that it is under investigation in the United States by the Department of Justice, the Environmental Protection Agency and California regulators, as well as by the authorities in Europe and other jurisdictions.

The accusations have put Daimler on the defensive just as the auto industry is in the midst of its biggest shift in technology in a century. Like other carmakers, Daimler must invest billions in electric cars and autonomous driving, or risk becoming irrelevant.

For the full year, net profit at Daimler plummeted 64 percent to €2.7 billion. Sales in 2019 rose 3 percent, to €173 billion.


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