Daimler sees emerging market car demand cooling

German car and truck maker Daimler missed quarterly revenue forecasts and warned strong demand for cars in the key emerging markets of China and India is likely to slow sharply next year.

Premium and mass-market carmakers have looked to fast-growing markets such as China to make up for sluggish sales growth in Europe, although China's car market, the world's biggest, is seen cooling this year due to rising fuel prices and tighter rules on car registrations.

Year-on-year wholesale vehicle sales growth of Daimler's luxury Mercedes-Benz cars in China tumbled to 8 percent in the second quarter from 82 percent in the first.

"Demand for cars in the major emerging markets of China, India, Brazil and Russia will probably continue to grow. But rates of growth in China and India are likely to be distinctly lower than last year," Daimler said on Wednesday.

Chief Executive Dieter Zetsche last month warned of growing economic risks in emerging markets that could cause the auto industry's growth engine to sputter.

Daimler, which also makes Smart cars, reported stronger-than-expected operating results for the second quarter, partly thanks to strong sales of vans and buses, and gave an upbeat outlook for the full year.

Its shares were down 0.8 percent at 51.4 euros by 0832 GMT, compared with a 1.7 percent lower STOXX Europe 600 Automobiles & Parts index.

"Even though profits came in strong, Daimler's sales have disappointed. And in the very demanding car sector, that's enough to send the shares down," a trader said.

French carmaker PSA Peugeot Citroen's warning early on Wednesday that the Japanese earthquake in March would hit profit was also weighing on Daimler shares, traders said.

CHINA, INDIA SLOWING

Emerging markets have generated almost three quarters of world growth over the past two years, but there is rising concern that inflation in China, the world's second-largest economy, could prompt a slowdown in emerging markets across the board.

Daimler's comments on emerging markets chimed with Peugeot, which earlier pared its forecast for growth in China to around 7 percent, from a previous forecast of 10 percent.More.