German automaker Dailmer AG, the world's second biggest manufacturer of luxury cars has expressed concern over shrinking car market which would cause a negative impact on the company's earnings this year.

The company reported a Euro 1.53 billion fourth-quarter loss. It also expressed anxiety over the sales of its marquee Mercedes-Benz cars which are expected to decline through 2009 due to the economic meltdown.

Sales decreased 12 per cent, to Euro 23.2 billion compared with Euro 26.5 billion the previous year. The number of vehicles the company managed to sell, also decreased by l 17 per cent to 480,055 compared with 575,353 a year earlier. The company also witnessed a drop in share price by more than 3.6 per cent.

The company fears a worse scenario in the sales of automobiles during 2009 with a further 10 % drop. The slump in car sales has dropped not only in strong markets like Europe and the US but also on the emerging markets like China, India and the Middle East.

The company also apprehends that the slump would also be felt in its commercial trucks unit, as well.

"Prospects for the major markets for commercial vehicles are also unfavorable," Daimler said in a statement, noting that the decline was likely to be acute in Western Europe where the industry is "at the beginning of a distinct cyclical downturn phase, which will particularly affect sales of medium and heavy-duty trucks."