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The third-quarter earnings result showed continued cash flow generation from the industrial business that reached 2.39 billion euros ($2.59 billion) in the quarter.

Mercedes-Benz saw a 64% drop in third-quarter earnings in the core car division as Chinese consumers reduced their spending on luxury goods in the weakening economy.

The company saw a slight decrease in annual car sales below the previous year and fourth-quarter sales in line with the third quarter.

Third-quarter earnings Showed Cash Flow Generation Reached  2.39 billion Euros 

The third-quarter earnings result showed continued cash flow generation from the industrial business. It reached 2.39 billion euros ($2.59 billion) in the quarter, up 2% year-on-year.

"The Q3 results do not meet our ambitions," CFO Harald Wilhelm said in a statement, adding that the group will step up cost cuts.

Adding to it, Mercedes said that the earnings in the period July-September were affected by the cost involved in the model revamp as well as the tough market. 

It is particularly due to the new versions of the G-Class SUV. The model is expected to be launched in the next quarter.

Adjusted Earnings Fell to 1.2 Billion Euros In Car Unit

The adjusted earnings before interest and taxes (EBIT) in the car unit fell to 1.2 billion euros compared to LSEG's mean estimate saw a 3.6% drop to 3.19 billion euros.

During the third quarter, the luxury carmaker reduced its full-year profit margin target twice. 

They blamed the declining profits and margins on a deteriorating Chinese automobile market,  joining a growing number of European rivals.

Third-Quarter Earnings Results Announced Amid Talks Between Brussels and Beijing

The results were announced at a time when there are talks between Brussels and Beijing over tariffs on imports of Chinese EVs into Europe. 

This is a significant concern for Europe's China-dependent car heavyweights as they worry about possible countermeasures.

Mercedes-Benz CEO Ola Kaellenius has warned that Chinese consumers remain cautious about making big purchases. 

This is due to the enduring economic downturn and a crisis in local real estate have created considerable uncertainty for consumers.

Mercedes-Benz includes China's Beijing Automotive Group Co Ltd and Geely Chair Li Shufu as its two top shareholders. 

The shareholders described the tariffs as a mistake urging the European Commission to delay their enforcement. This will allow further talks regarding the deal.