German automaker Daimler on Thursday reported falling revenues and profits in the second quarter despite selling more cars, as trade war and the cost of refitting manipulated diesel vehicles gnawed at its financial results.
The Mercedes-Benz and Smart manufacturer booked net profit attributable to shareholders of 1.73 billion euros ($2.0 billion) between April and June, down some 29 percent year-on-year.
While the group sold 1.0 percent more cars and trucks, at 833,005 vehicles, revenues fell 1.0 percent, to 40.8 billion euros.
Operating, or underlying profits also fell 27 percent, to 2.6 billion euros.
"The automotive industry and therefore we too have many challenges to overcome," chief executive Dieter Zetsche said in a statement.
Daimler pointed to "temporarily weaker pricing including tariffs" as the main reason why revenues and operating profits fell at its flagship Mercedes-Benz cars division.
Like high-end rival BMW, the group has suffered as autos it builds in the United States have been met with border taxes when entering China, after Beijing retaliated against levies imposed on its goods by US President Donald Trump.
Also weighing on the division and the Mercedes-Benz vans unit were currency headwinds and the cost of refitting some 774,000 diesel vehicles across Europe that Berlin ordered recalled in June.
Authorities said the cars contained "illegal defeat devices", engine software used to make them appear to emit less harmful pollutants in the lab than in real on-road driving.
The mass recall dragged Daimler deeper into the "dieselgate" scandal that had previously mostly dirtied Volkswagen's image.
Meanwhile Daimler's financial services division suffered a collapse in operating profit, from 522 million euros in 2017's second quarter to 66 million this year.
One 418-million-euro charge arose over Daimler's role in a system set up to collect tolls on trucks on German highways.
After it suffered massive problems in its first 16 months of operation, a court ruled businesses involved in a must pay Berlin compensation.
Looking ahead to the full year, Daimler expects to report operating profit "slightly lower" than 2017's 14.7 billion euros.
It blamed the weak outlook on the impact of China's tariffs and the costs of new, more stringent emissions testing procedures known as WLTP, as well as the cost of the diesel recall.