(Photo: Daimler AG)

FRANKFURT, Germany Automaker Daimler AG laid out the hope of a recovery in the West European car market later this year as it reported a big jump in its second-quarter net profit following the sale of its stake in aerospace firm EADS.

The Stuttgart-based company said Wednesday that net profit rose to €4.58 billion ($6.04 billion) from €1.56 billion in the same quarter a year before. Sales rose 3 per cent to €29.7 billion.

The maker of luxury brand Mercedes saw a gain of €3.2 billion from disposing of its remaining stake in EADS, the parent company of plane maker Airbus. Daimler made the move to concentrate better on its core auto business.

Daimler shares rose 0.5 per cent to €52.95 in morning trading in Europe.

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The company said that the stricken Western European car market seems to have bottomed out and that a gradual improvement of the market situation is to be anticipated in the second half of the year. The overall market is still expected to shrink for the full year, the company said.

European car sales have been depressed by the continents financial and economic crisis. Sales fell 6.6 per cent in Europe over the first six months of the year compared to the same period last year, according to the European carmakers association ACEA.

The difficulties that carmakers face is largely due to the austerity measures that many European governments have pursued in order to get their public finances into shape. Many have cut spending and raised taxes to cope with too much debt and that prolonged recessions and worsened unemployment  especially in the hardest hit countries such as Spain, Italy, Portugal and Greece. Slow sales have put pressure on all carmakers but especially on mass-market manufacturers such as Ford Motor Co., General Motors Opel subsidiary and PSA Peugeot Citroen.

Daimler CEO Dieter Zetsche said the result represents progress in our earnings development, but no cause for complacency. We will continue to work hard on achieving our goals.

The companys flagship Mercedes-Benz Cars division, which also includes the Smart compact, saw operating earnings slip due to a less profitable model mix and expenses for new technologies and vehicles. Profits excluding financial items such as interest and taxes fell 22 per cent to €1.04 billion.

The divisions return on sales fell to 6.4 per cent from 8.7 per cent, short of the companys goal of a 10 per cent profit margin for passenger cars. Total unit sales rose 9 per cent to 404,700 in the quarter from a year ago, while sales revenue increased by 6 per cent to 16.3 billion euros.