Daimler profits fall 16 per cent on diesel recall costs

FRANKFURT – German automaker Daimler says net profit fell 16 per cent in the third quarter as a voluntary recall to improve diesel emissions hurt earnings at its Mercedes-Benz luxury car brand.

Net profit fell to 2.3 billion euros ($2.7 billion) from 2.7 billion euros in the same quarter a year earlier despite a 6 per cent increase in sales revenue to 40.8 billion euros.

The Stuttgart-based company said Friday that earnings at the Mercedes-Benz division, a pillar of the company’s earnings, were hit by a charge of 223 million euros to pay for an engine control software update on existing vehicles to reduce diesel emissions. The voluntary recall is part of an effort by German automakers to restore confidence in diesel technology and ward off bans on diesels in German cities.