Daimler has reported a drop in profits as the cost of recalling vehicles and work to reduce emissions from diesel engines weighed on the world’s biggest manufacturer of luxury cars.

The company said that in the third quarter vehicle sales at a group level rose to 824,000, up 9pc compared with the same period last year, and revenue was 6pc higher at €40.8bn. However, net profit slipped 17pc to €2.3bn and on an underlying basis it dropped 14pc to €3.5bn.

The Mercedes cars division held back performance, with a huge recall and work to modify older diesel engines to make them less polluting resulting in a hit totalling about €450m.