Chrysler and Mercedes disappoint Daimler

Mercedes-Benz, a luxury car division owned by Daimler AG, recently suffered a drop in sales causing the German carmaker to post quarterly results that were worse than expected. As a recession is fast approaching the European economy, luxury cars are getting left behind. ┬á Mercedez-Benz car sales fell 17.9 percent to $14.9 billion, and the divisionÔÇÖs pre-tax earnings fell an astounding 91.6 percent to $143.6 billion. Declining sales in a sufferable economic downturn, the divisionÔÇÖs high-cost operating environment, and a special $575.5 million charge relating to a drop in value of leased Mercedes cars are what caused the pressure. ┬á Daimler has managed to squeeze out a small profit of $273 million for the third quarter, an improvement from last yearÔÇÖs $2.1 billion loss, but the numbers were still below expectations, causing Daimler to cut its annual profit forecast. ┬á DaimlerÔÇÖs luxury car division is not the only one to blame for the disappointing performance. Just over a year ago, Chrysler LLC, the third largest automaker in the US and owned by Daimler, suffered in sales as it couldnÔÇÖt get its gas-guzzling cars to consumers who were becoming more and more price conscious. ┬á DaimlerÔÇÖs third-quarter net loss this year from ChryslerÔÇÖs operations was $97 million, representing most of DaimlerÔÇÖs $113 million loss relating to Chrysler Holdings LLC, which includes the US automaker and its finance operations.┬á Chrysler is saying its quarterly losses are nearly five times the size of DaimlerÔÇÖs, amounting to $485 million. ┬á Under pressure to trim costs, Chrysler is set to shut a sports-utility vehicle plant in Delaware a year ahead of schedule, and cut a shift at a Jeep factory in Ohio. The cuts will drop about 1,825 jobs and take affect by the end of this year. ┬á In order to bring their numbers up, Daimler is looking to sell its remaining 19.9 percent ownership of Chrysler to majority owner Cereberus or rival General Motors, but no deal has been finalized.