European car and truck makers delivered unexpectedly upbeat sales news amid the Covid-19 crisis as Mercedes-Benz maker Daimler said demand had recovered more quickly than once thought in China, its most important market, while VW also said its sales in China were recovering, and Volvo trucks posted better-than-expected earnings.
Daimler said a late-quarter recovery in demand spared the Mercedes-Benz maker from losing as much money as analysts were expecting.
The company’s shares climbed to the highest in more than a month though they are still down by around 20% since the start of the year.
Daimler reported a preliminary deficit of €1.68bn before interest and taxes after sales were decimated by the coronavirus pandemic, with measures to contain the disease sending production plunging.
Although plants and showrooms have now largely reopened, business is returning unevenly, with car sales in Europe coming back more slowly than North America or China.
The results are “consistent with a generally improving commentary from German manufacturers in recent weeks”, Philippe Houchois, a Jefferies said.
Mercedes-Benz deliveries in China, the brand’s largest market, climbed to a record in the second quarter, and global retail sales of its cars edged higher in June.
To keep the momentum going, the Stuttgart-based company is preparing to roll out new iterations of its flagship S-Class sedan, a key profit driver that continues to out-sell rivals including BMW’s 7 Series.
It remains to be seen whether demand is improving fast enough to make a meaningful difference in Daimler’s outlook for the full year.
The company now targets a workforce reduction of about 20,000 jobs.
Volkswagen said earlier this week that orders have been gradually ticking up in Germany but warned the recovery remains shaky and future developments are difficult to predict.
The German automaker sold 1.59 million vehicles in China in the first six months of 2020, down 17% from 1.92 million units in the same period last year. For all of 2019, Volkswagen sold around 4.23 million vehicles in the country.
Swedish truckmaker Volvo also posted better-than-expected second-quarter core profit as production shutdowns caused by the coronavirus were lifted, but it cautioned that the pandemic would weigh on demand for the foreseeable future.
The rival of Germany’s Daimler and Volkswagen’s Traton said that the order intake for trucks under the Mack and Renault brands and its own name fell 45% year-on-year.
It said bookings improved toward the end of the second quarter but fallout from the virus, which has disrupted production and sent order bookings tumbling worldwide in an industry prone to sharp cyclical swings, meant the outlook remained unclear.
-Bloomberg & Reuters