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Status: February 5, 2015 – Annual Press Conference
As a result of the rather subdued economic outlook, growth in global demand for cars of approximately 4% is expected in 2015.
China is once again expected to deliver the biggest contribution by far to the expansion of global car sales. Substantial growth seems possible yet again for the world’s biggest car market. The US market should also continue its solid development. Although sales figures are meanwhile back to the pre-crisis level and thus close to market saturation, slight growth is expected once again in 2015. With projected sales of more than 16.7 million units, more cars and light trucks should be sold than since the year 2005. A continued demand upturn is to be anticipated for Western Europe. The German car market is expected to expand at a comparatively low rate to a volume of just over 3 million units.
Since the Japanese car market has been at an artificially high level for several years due to various special effects, a correction is expected in 2015 with a moderate decrease in demand. The major emerging markets are likely to show varying developments in 2015. A significant recovery of demand for cars is anticipated in India. In Russia, however, a further significant drop in sales of cars must be assumed due to the worsening economic crisis there.
The world market for medium- and heavy-duty trucks is likely to expand slightly in 2015 after the significant demand downturn last year. However, market developments will remain disparate at the regional level. The NAFTA region once again promises to deliver the most positive development. Most economic indicators suggest that demand for trucks will remain strong there with expected market growth in the magnitude of 10%. On the other hand, prospects for the European market are significantly less favorable due to the continuation of only hesitant economic recovery. From today’s perspective, demand is expected to remain only in the region of the relatively weak prior-year level.
Market conditions in Brazil are likely to remain difficult: Starting from a low level, market volume is expected to decrease again in the magnitude of 10%. The Japanese market for light-, medium- and heavy-duty trucks has shown strong growth in recent years. But due to the economic slowdown, a slight market contraction must be anticipated in 2015. In Indonesia, however, market recovery and growth in a magnitude of 10% are to be expected. The severe recession in Russia will continue to depress the market, so demand should fall sharply once again. In India, however, a significant market recovery is expected due to slightly improved economic prospects. The market outlook for China is connected with uncertainty. The introduction of the CN4 emission standards (similar to Euro IV) on January 1, 2015 is likely to depress demand. Daimler currently anticipates a market volume in 2015 of slightly below the previous year.
Overall, Daimler anticipates stable demand for vans in Europe in 2015. That applies to medium-size and large vehicles as well as to small vans. For the United States, moderate growth is expected in the market for large vans. In Latin America, Daimler assumes that the market for large vans will stabilize following the significant contraction in 2014. In China, an ongoing revival of demand is anticipated in the market the division addresses there.
Daimler expects a slightly larger market volume for buses in Western Europe in 2015 than in 2014. After last year’s significant decrease in demand for buses in Brazil, demand is likely to remain at that low level in 2015.
Mercedes-Benz Cars will consequently follow its path of growth in 2015 in the context of the »Mercedes-Benz 2020« offensive. Overall, the division intends to significantly increase its unit sales and thus reach a new record. This is based on the very attractive and young model portfolio, which will be expanded with some additional new products in 2015. An important contribution will come from the new C-Class, which is now available in sedan and wagon versions in all markets. Furthermore, in the first seven months of 2015, four new vehicles will be launched that have no predecessor model. The first automobiles of the new and exclusive Mercedes-Maybach brand are being delivered to customers already in February. They will be followed by the sports car Mercedes-AMG GT, the CLA Shooting Brake and the GLE Coupe, a sporty SUV. Within the context of the product offensive, the division will also renew almost its entire range of SUVs in 2015, thus stimulating additional demand.
Mercedes-Benz Cars anticipates significant growth in unit sales in 2015 also for the smart brand. The new fortwo and forfour models have been available in Europe since November 2014. Both of these products will be launched in all key markets in 2015 and will therefore contribute to the positive development of unit sales at Mercedes-Benz Cars. As no four-seat smart model had been offered in recent years, completely new target groups can now be addressed with the smart forfour.
From a regional perspective, the division expects the Asian markets to make major contributions to the growth in unit sales in 2015. In China, the expansion of the sales organization and of local production capacities is continuing, thus creating the right conditions for further growth. But unit sales will increase also in North America as a result of the new models. Mercedes-Benz Cars wants to profit to an above-average extent from the slight revival of demand expected in Western Europe.
Daimler Trucks anticipates a significant increase in unit sales in 2015. In Western Europe, demand is likely to be adversely affected by the continuation of weak economic growth, leading to unit sales in the magnitude of the previous year. But the division believes it will be able to defend its very good market position with its fuel-efficient products, high customer acceptance and a flexible production network. In Turkey, Daimler Trucks anticipates significant sales being brought forward to 2015 due to the introduction of Euro VI emission regulations in 2016. In Brazil, the ongoing lack of economic growth and less favorable financing conditions are likely to dampen overall demand, so falling unit sales have to be expected there. In the medium term, however, Brazil will continue to be an important market. Daimler Trucks is therefore continuing to invest in local products and the production sites in São Bernardo do Campo and Juiz de Fora. Furthermore, the optimization program will be continued in Brazil, thus further increasing the efficiency of the facilities in that country.
In the NAFTA region, the truck division assumes that in line with the expected market development, unit sales will once again be higher than in the previous year. The new and successful products should safeguard its market leadership in the region. Unit sales in Asia are also likely to develop positively overall. In Indonesia, one of the main markets in Asia, the division expects unit sales to recover after the decrease in 2014. In India, the further expansion of the dealer network should facilitate significant growth in unit sales. In addition, the expanded range of FUSO vehicles produced in India can be expected to stimulate additional sales growth in Asia and Africa. In Japan, however, growth rates will probably decrease significantly.
Mercedes-Benz Vans plans to achieve significant growth in unit sales in 2015. Above all in Europe, its core market, significant increases in sales of medium-size and large vans are anticipated. This development is likely to be primarily driven by the new products Vito and V-Class, which are now fully available following their launch in 2014. In the context of the »Vans goes global« strategy for the division, the Vito will be launched also in North and South America in 2015, stimulating additional demand there. The division aims to achieve further growth in those markets also with the Sprinter, which will be produced in North America in the future additionally. Furthermore, Mercedes-Benz Vans intends to expand its presence in China in the market segment it addresses there.
Daimler Buses assumes that it will be able to defend its market leadership in its core markets for buses above 8 tons with innovative and high-quality new products. For the year 2015, the division anticipates a slight increase in total unit sales. This is based on the assumption of a stable development of unit sales in Europe and Latin America and rising unit sales in Mexico.
Daimler Financial Services aims to achieve further profitable growth in the coming years. For the year 2015, significant growth is anticipated in both new business and contract volume. This will result from the growth offensives of the automotive divisions, the specific targeting of younger customers, the expansion of business especially in Asia, and the further development of the online sales channels. Daimler Financial Services will increase its equity base in China by approximately €0.5 billion in order to strengthen the growing financing business. The business with the flexible car-sharing model, car2go, will also continue to grow, and will systematically expand the range of mobility services under the umbrella of moovel.
“In the coming years, we want to further strengthen what has traditionally differentiated Daimler from the competition: exceptional quality and technological leadership,” stated Dieter Zetsche. “At the same time, we intend to reach a level of profitability that is unprecedented at this company. Combining both is the main task of our management.”
On the basis of assumptions concerning the development of automotive markets and the divisions’ planning, Daimler expects to achieve significant growth in total unit sales in 2015. It assumes that the Group’s revenue will also grow significantly in 2015. Without exception, the divisions currently benefit from a very attractive and particularly competitive product range, which has been expanded and consistently renewed in recent years. Daimler therefore assumes that it will profit to an above-average extent from the slight revival of automotive markets that is expected for 2015, and will be able to strengthen its position in important markets. The anticipated revenue growth is therefore likely to be supported by all divisions. In absolute terms, Mercedes-Benz Cars and Daimler Trucks will deliver the biggest contributions. In regional terms, the highest growth rates are expected in Asia and North America, but business volumes should expand also in the other regions. In particular in China, Daimler is creating the right conditions for further growth with new sales outlets and additional production capacities, and it is expanding its production plants also in India and North America.
The growth in unit sales and revenue that is anticipated will have a positive impact on earnings in 2015. Additional profit contributions will come from the efficiency programs that have been implemented in all divisions. Within the programs »Fit for Leadership« at Mercedes-Benz Cars, »Daimler Trucks #1« at Daimler Trucks, »Performance Vans« at Mercedes-Benz Vans and »GLOBE 2013« at Daimler Buses, measures have been taken for sustained improvements in cost structures as well as for additional business activities so that the Group achieved total profit contributions of approximately €4 billion by the end of 2014, of which about 80% is already effective. The full effect of those programs will be reflected in the Group’s earnings in 2015.
On the basis of the currently anticipated development of markets and exchange rates and the planning of the divisions, Daimler assumes that Group EBIT from the ongoing business will increase significantly once again in 2015.
For the individual divisions, the following targets for EBIT from the ongoing business have been set for the year 2015:
Mercedes-Benz Cars: significantly above the prior-year level,
Daimler Trucks: significantly above the prior-year level,
Mercedes-Benz Vans: significantly above the prior-year level,
Daimler Buses: slightly below the prior-year level, and
Daimler Financial Services: slightly above the prior-year level.
In the medium term, Daimler aims to achieve an average return on sales across market and product cycles of 9% for the automotive business in an annual average. This figure is based on the return targets for the divisions: 10% for Mercedes-Benz Cars, 8% for Daimler Trucks, 9% for Mercedes-Benz Vans and 6% for Daimler Buses.
With its research and development activities, Daimler pursues the goal of strengthening the Group’s competitive position in face of the upcoming technological challenges. For this reason, Daimler will once again significantly increase its expenditure for research and development activities to €6.7 billion in average in the years 2015 and 2016. Daimler will also increase its already very high investment in property, plant and equipment, and plans to invest an amount of €5.6 billion in average in the years 2015 and 2016.
“New products, new technologies or new mobility concepts, the goal is the same: We are creating opportunities for the future – for the Daimler Group and its employees,” said Dieter Zetsche.
Due to the generally very favorable business development that is expected for 2015, production volumes will continue rising. At the same time, the efficiency-enhancing measures that have been implemented at all divisions in recent years will now take full effect. The medium- and long-term programs for structural improvements of business processes should facilitate further efficiency progress. Against this backdrop, Daimler assumes that it will be able to achieve its ambitious growth targets with only slight workforce growth. Additional jobs are likely to be created at companies operated together with Chinese partners and whose employees are not included in the figures for the Daimler Group.
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