Daimler profit warning sends vehicle shares skidding

The Mercedes-Benz maker Daimler has become the first major company to issue a profit warning after being hit by the escalating trade war between the United States and China.

China said it would collect levies on billions of dollars worth of United States goods, including cars, from 6 July in return. The company has said previously the majority of the SUVs it produces in Alabama are exported around the world but declined to provide China-specific data.

Daimler said it now expects full-year earnings before interest and taxes to come in slightly below last year's level.

The Trump administration has threatened further tariffs on another up to $400bn worth of Chinese goods if China continues to retaliate. BMW, which has large factories in the USA, is also likely to be affected by the trade war.

In late morning trading in Frankfurt, Volkswagen was down 2.4%, while Daimler was more than 4% lower.

Mercedes-Benz had record sales in the first three months of this year, led by China, where sales increased by 17%.

Daimler said the Chinese tariffs will result in "fewer than expected SUV sales and higher than expected costs", which won't be completely passed on to customers.

Daimler also said a new vehicle certification process based on stricter fuel efficiency test procedures will hit sales in the second half of the year, according to CNBC.

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