Outlook

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Status: April 24, 2013 - Interim Report Q1 2013

At the start of the second quarter, the world economy is still performing significantly below its long-term growth trend. However, the early indicators such as the business and consumer climate, incoming orders or trade in goods give reason to hope that the global economy could gain some momentum in the quarters ahead, so that the first quarter of 2013 could mark the low point for the year. A decisive contributing factor will be whether the economy of the European Monetary Union can finally also begin to recover. However, even in the event of a moderate recovery in the second half of the year, the stagnation of economic performance at last year’s level will be a very challenging task for the EMU to deal with. If the disappointing development of the first quarter continues, a new decline will be unavoidable. The outlook in the USA is significantly more positive, but here too more buoyant development is hindered by austerity measures. After the previous forecast of 8% growth for China, the publication of 7.7% actual growth for the first quarter could lead to slightly lower expectations for the full year. Fortunately, Brazil and India are expected to post higher growth rates than in the previous year, although Brazil is coming out of the crisis with slower momentum than originally hoped. Assuming a general recovery in the industrial countries and emerging markets, this year, the world economy should grow by around 2.5%, up to a maximum of 3%. However, in view of the weak starting position and continuing risks, the further development of the world economy continues to be extremely fragile and will be susceptible to external disturbances.

According to the current estimates, the worldwide demand for passenger cars should grow in the range of 2% to 4% in the current year, driven primarily by the continued strong increase in the demand in the USA and the further expanding Chinese market. While the growth rate in the US market is expected to be only in the single-digits, at a projected volume significantly in excess of 15 million units, this is to be the highest level of registrations in the last six years. The Chinese market could grow at a slightly higher rate thanks to the economic recovery. On the other hand, as a result of the continuing economic weakness, a decline is again expected on the West European market. Demand will thus continue to move around a 20-year low. The German market cannot decouple itself from this development and is expected to fall significantly short of the previous year’s level. A decline is also expected on the Japanese market, after the previous year’s level, which was unusually high as a result of the government buying incentives. With the exception of China, the growth prospects for the passenger car markets in the large BRIC states tend to be rather modest. Growth in India will probably weaken significantly compared to the previous year. Vehicle sales in Russia should show another moderate increase.

According to the current status, global demand for medium-duty and heavy-duty trucks is expected to grow perceptibly in 2013. However, this depends very decisively on the development of the world’s biggest market, China, which should experience a perceptible recovery in demand; however, the start of the year proved to be below the expectations. The demand in North America should stabilize in the coming months. However, from the current perspective we expect a market drop of up to 5% for the full year. In view of the continued weak economic environment, we expect a drop of around 5% under the previous year’s level for the European truck market. The market volume in Japan could drop by up to 5% below the level of the prior year; the possible effects of the new economic package of the Japanese government are still difficult to assess. A moderate recovery and growth by as much as 10% are expected for the Brazilian market, thanks to the improved economic outlook and favorable financing conditions. The Russian market has already returned to near-pre-crisis levels and is expected to grow again moderately in the year 2013. On the other hand, a drop in truck demand is expected for India due to the continued belowaverage economic momentum.

After the weak development in the European vans market in the first quarter of 2013, we are expecting a step-wise recovery of demand in the remaining quarters of the current year, and a decrease of around 5% for the full year. Continued weak demand is expected for the countries in Southern Europe. The outlook for the USA is positive: There we expect another increase in the market for large vans. The market for large vans in Latin America is expected to grow again after the significant decline in the previous year. In China, we expect a slight recovery in the market addressed by us.

In Western Europe we expect market volume for buses in the magnitude of the previous year. The demand for buses in Latin America is expected to increase moderately after the significant decline in the year 2012. The market for buses in Brazil is expected to recover in the medium-term, also under the aspect of the upcoming world soccer championship in 2014 and the Olympic Games in 2016.

On the basis of the planning of the divisions, Daimler expects another increase in its total unit sales in the year 2013.

Mercedes-Benz Cars is consistently moving ahead with the ‘‘Mercedes-Benz 2020’’ offensive. Numerous model changes and new products are to ensure that the division will achieve yet another record in unit sales in the year 2013. The new models in the high-volume compact car segment will make a major contribution to sales growth. After the successful start of the A-Class and B-Class, in the middle of April 2013, the fourdoor CLA coupé came on the market as the third model based on the new compact car architecture. The extensively revised new E-Class sedan and station wagon are also available at Mercedes-Benz sales & service outlets and sales partners since April. From June 2013, the new E-Class coupés and convertibles will also provide added sales momentum. The electrically driven, locally emission-free super sports car SLS AMG Coupé Electric Drive will come on the market in June 2013. Mercedes- Benz expects significant growth in the luxury segment for the second half of 2013, due mainly to the launch of the all-new S-Class. As the most important new model of the year 2013, the new S-Class equipped with trailblazing innovations will set new standards of comfortable and safe driving under the umbrella term “Mercedes-Benz Intelligent Drive”. In addition, the Mercedes-Benz brand will continue to profit from the market success of the models in the SUV segment in 2013.

The smart brand sees a good chance that the unique two-seater can continue to defy its advancing life cycle in the highly competitive micro-car segment in 2013 and can achieve unit sales in the previous year’s range again.

Daimler Trucks expects a slight increase in unit sales for the current year. In the first half of the year, however, the continued weak state of the economy will probably lead to a rather modest or even negative development of unit sales in a number of core markets. The extensive product offensive, which is now largely complete in all relevant regions, will provide a counterbalance for the difficult economic conditions. As a result of this offensive, we are in a very good starting position: In Europe, sales will get added impetus from the full product range of Actros, Antos and the new Arocs for the construction sector, as well as the new Atego, that is already in line with Euro VI standards significantly before the effective date of the regulation. We will maintain our competitive position in the NAFTA region with our excellent vehicle offering in combination with strong Detroit components. A convincing sales argument in favor of the Freightliner Cascadia Evolution, for example, is the optimization of the vehicle aerodynamics and power train, which yields additional fuel savings of 5% compared to its predecessor, the previous benchmark on the market.

Our Fuso and BharatBenz brands will continue to make an important contribution to sales growth in 2013. In future, trucks of the Fuso brand will also be produced in Chennai and exported to the Asian markets outside India and to Africa. The Fuso Canter and his hybrid versions, which are also produced in Europe since 2012, should provide additional stimuli for demand. In addition, we will bring additional models of our BharatBenz truck on the market in India and will continue to expand the sales and service network. In Russia and China we are progressively expanding the collaboration with our local partners Kamaz and Foton and are thus creating the conditions for further exploitation of these growth markets.

Mercedes-Benz Vans expects to achieve an increase in unit sales for the year 2013. On the product side, the new Mercedes- Benz Citan and - from mid 2013 - the new generation of the Sprinter should also contribute to sales and earnings. Moreover, the start of local production of the Sprinter Classic in Russia from the second quarter of 2013 should enable us to continue to increase our unit sales in this growth market.

Daimler Buses expects a significant increase in unit sales for the year 2013, with an increase in bus chassis as a percentage of total unit sales. We expect a significant recovery of demand for the year 2013, especially for Latin America. We expect stable development at a persistently weak level for the complete bus business in Europe.

Daimler Financial Services expects a further increase of new business and contract volume for the full year 2013.

After the significant increase in the year 2012, we expect that Daimler Group revenue will further increase in the full year 2013. In the regions, we expect above-average growth rates in the emerging markets and in North America.

On the basis of the planned new models, the increasing effects of the efficiency programs that we have initiated and the assumptions made for the development of markets important to Daimler, we expect earnings to improve in the second half of 2013 compared with the level of the first half. Due to the fact that there will be no further equity-method results from EADS in the course of the year as well as lowered market expectations and the weaker than expected EBIT in the first quarter, Group EBIT from the ongoing business in full-year 2013 is expected to be below the previous year's level.

Mercedes-Benz Cars anticipates, full year EBIT below the levels of 2012. Daimler Trucks and Mercedes-Benz Vans expect EBIT from ongoing business in the magnitude of the prior year, while Daimler Buses should exceed the EBIT for 2012. In 2014 and the following years, we expect an improvement in operating profit for all automotive divisions and for the Group. For Daimler Financial Services we anticipate a stable development of earnings in the next two years.

From today’s perspective we assume that the number of employees worldwide will remain largely stable compared to the 2012 year-end.

 

This document contains forward-looking statements that reflect our current views about future events. The words "anticipate", "assume", "believe", "estimate", "expect", "intend", "may", "can", "could", "plan", "project", "should" and similar expressions are used to identify forward-looking statements. These statements are subject to many risks and uncertainties, including an adverse development of global economic conditions, in particular a decline of demand in our most important markets; a worsening of the sovereign-debt crisis in the Eurozone; a deterioration of our refinancing possibilities on the credit and financial markets; events of force majeure including natural disasters, acts of terrorism, political unrest, industrial accidents and their effects on our sales, purchasing, production or financial services activities; changes in currency exchange rates; a shift in consumer preference towards smaller, lower-margin vehicles; or a possible lack of acceptance of our products or services which limits our ability to achieve prices and adequately utilize our production capacities; price increases in fuel or raw materials; disruption of production due to shortages of materials, labor strikes or supplier insolvencies; a decline in resale prices of used vehicles; the effective implementation of cost-reduction and efficiency-optimization measures; the business outlook of companies in which we hold a significant equity interest, most notably EADS; the successful implementation of strategic cooperations and joint ventures; changes in laws, regulations and government policies, particularly those relating to vehicle emissions, fuel economy and safety; the resolution of pending government investigations and the conclusion of pending or threatened future legal proceedings; and other risks and uncertainties, some of which we describe under the heading ‘‘Risk Report’’ in Daimler’s most recent Annual Report. If any of these risks and uncertainties materialize, or if the assumptions underlying any of our forward-looking statements prove to be incorrect, the actual results may be materially different from those we express or imply by such statements. We do not intend or assume any obligation to update these forward-looking statements since they are based solely on the circumstances at the publication date.

 

More detailed information can be found in the extensive Annual and Interim Reports as well as in additional data files and reporting formats more