German luxury carmaker Mercedes-Benz said on Friday its profits in the third quarter plunged by more than 50 percent, hit hard by weakness in the key Chinese market.

Net profit came in at 1.72 billion euros ($1.86 billion), down from 3.7 billion euros a year ago, while sales slipped almost seven percent to 34.5 billion euros, the group said.

Vehicle deliveries fell three percent, dragged down by a 13-percent fall in China. Sales of its most profitable luxury cars worldwide fell 12 percent.

The poor results were due to a "challenging market environment and fierce competition, particularly in China", the auto manufacturer said.

Mercedes chief financial officer Harald Wilhelm conceded that the earnings "do not meet our ambitions".

Germany's auto titans are struggling in China, one of their most important markets, as the world's second-biggest economy battles through a period of turbulence and amid growing competition from homegrown carmakers.

Mercedes said it sees annual sales in 2024 slightly below the previous year, and in the fourth quarter they are expected to be around the same as the third quarter.

The carmaker already cut its annual outlook twice in the third quarter and is forecasting operating profit "significantly below the prior year level".

Carmakers across Europe are suffering due to high costs at home, a stuttering shift to electric vehicles and challenges in China, for many years a major source of growth.

Brussels is also set to slap higher tariffs on imports of electric cars from China, a headache in particular for German automakers who are heavily invested there and fear retaliation.