News from German automaker Daimler shows how an emissions scandal can damage a car company’s success over a long time frame.
The newest reports of downgraded profit predictions shows the distress that Daimler is still mired in: Despite big investments in markets like North America, with tens of thousands of Daimler employees stateside, the firm seems to still be struggling to beat estimates partly due to the aftereffects of a diesel emissions story that hangs onto its heel.
With company leadership saying the diesel scandal will affect second-quarter earnings, and inciting an increase in expenses in handling the fallout, Daimler top brass have predicted profits for 2019 relatively flat with 2018 numbers. That’s not great news.
The predicted lack of growth brought a stock decline of over 3% in recent trading, with a historical chart showing 20% loss since April.
In addition to the consequences for Daimler itself, and its iconic Mercedes-Benz line, the German auto industry as a whole continues to struggle with a legacy of emissions cheating.
Investigators have found that Volkswagen and Daimler acted together, which triggered antitrust probes, in turning out new emissions systems. That’s in addition to the emissions shenanigans we are all more familiar with — the lack of transparency on fuel economy and clean exhaust that still have German companies recalling vehicles in the U.S.
Daimler has committed to working toward cleaner, greener vehicles — as are many automakers in today’s market.
Also, with solar energy at a critical mass and hybrids and plug-ins appearing on American roads, we’re closer to the actual adoption of new automotive technologies that would be more widespread and collectively sustainable.
But the continuing downward pressure from the emissions cheating scandal continues to dog the German automaker and depress its efforts to forge ahead.
In today’s trading, Daimler is flat at $13.60, with five-day highs around $14.00. Although the stock did reach over $16.00 in April, Daimler is still up from the beginning of May when it stood around $12.50.
