German carmaker Daimler has suffered a massive drop in sales for February as the global economic downturn continues eating into company earnings.
The global economic crisis is hurting demand for new cars
The manufacturer said on Friday, March 6, it sold a total of 72,200 vehicles last month, a decline of 25.4 percent from February 2008 when 96,800 cars were sold.
The maker of the luxury Mercedes brand said "persistently strong declines in nearly all markets" and the forthcoming release of the new E-Class model, which meant car buyers where holding out on new purchases, had driven the sales slump.
Daimler said however that it had taken 40,000 advance orders on the new E-Class.
Daimler also produces the AMG, Smart and Maybach models. Sales of its flagship Mercedes-Benz brand were down 27.8 percent to 63,600, while sales of its Smart city car declined 1.9 percent to 8,600, the company said.
In the US, however, sales of Smart cars rose 29 percent to 1,400 cars from 1,100 in 2008. Sales of the Smart in Germany also rose sharply, recording a 28 percent increase for the month.
Mercedes is making cars, but motorists aren't buying them
Sales of Mercedes in the Daimler's home market of Germany were no exception to the overall downward trend, dropping 26.4 percent. In China, however, the brand maintained its top position as the fastest growing premium make, with sales rising 17 percent.
Daimler's coffers took another beating on Friday after the company agreed to fork out 555 million euros ($700 million) to settle a tax dispute with the US Internal Revenue Service (IRS).
The IRS had been chasing the manufacturer over its US leasing operations in the 1990s that had been financed with foreign capital.
Daimler said it had taken steps to "cover the anticipated tax liability … which is currently expected to be paid in mid-2009."