(Reuters) - Mercedes-Benz's core car sales fell in 2024, a tough year for the auto industry marked by waning demand in a weak economy, especially in key market China, the German luxury carmaker said on Friday.

It sold 1,983,400 cars during the year, down 3% versus 2023, weighed down by a 7% drop in China and a 3% decline in Europe.

Annual sales of battery-electric cars (BEV) dropped by 23% to 185,100 vehicles, adding pressure on the carmaker as new, harsher EU CO2 emission reduction targets take effect this year, which could potentially mean costly pooling deals or hefty fines for Mercedes if the BEV sales don't pick up.

The automaker cut its full-year profit margin target twice in 2024 and said it will step up cost cuts, joining a growing number of European rivals blaming a weakening Chinese car market for falling profits and margins.

Mercedes also plans to lower its mid-term profitability targets as market conditions are unlikely to improve in the near future, a source familiar with the matter told Reuters on Tuesday.

The carmaker is due to report full-year 2024 financial results on Feb. 20.