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Status: October 24, 2013 - Interim Report Q3 2013
At the start
of the fourth quarter, most forecasts suggest that the world economy
will continue along its course of moderate expansion. Key leading indicators such as the indices of purchasing managers’ business confidence show that the global economy is now gaining more support than it was just a few months ago. But unlike in recent years, it is now mainly the industrialized countries upon which this positive assessment is based. Indicators of business confidence in key emerging markets, including India, Brazil and Russia, are only moderate, however. The beginning of the fourth quarter has been affected by a renewed increase in uncertainty in the financial markets. The main negative factor is the fiscal-policy problem in the United States with the conflict about the budget, which has even led to a temporary shutdown of government agencies and public facilities, and the required increase in the debt ceiling. Although a debt default was avoided at the last minute, it is not yet clear how the ongoing uncertainty about future limits on the debt ceiling will affect consumer and investor behavior. Another source of uncertainty is the European Monetary Union, where the critical political situation in Italy and questions about possible new rescue packages are having an impact. However, if it is possible to convert the positive tendencies regarding business and consumer confidence into real economic activity, the European economy should be able to grow slightly for the third consecutive quarter. Supported by far-reaching stimulating actions, the Japanese economy should remain on its growth path. China’s solid development is crucial for the world economy. Already in the third quarter, it seemed that the country’s growth slowdown had not continued. Although economic forecasts for most emerging markets have been revised downwards substantially during the course of this year, they are likely to achieve growth of 4 to 4.5% in full-year 2013. However, this is their lowest growth rate of the past ten years apart from crisis year 2009. But this means that the emerging markets continue to expand significantly faster than the industrialized countries, which should only achieve only about 1% growth due to the weak start to the year. For the world economy, this would mean growth of nearly 2.5%, which is not only significantly below the long-term average, but also continues to be very sensitive to external disturbances.
perspective, worldwide demand for cars
seems likely to expand by about 3% this year. Growth will primarily be driven by ongoing strong increases in demand in the United States and China. Although growth in the US market will no longer be at the double-digit rates of recent years, new registrations will reach their highest level in six years at probably about 15.5 million cars and light trucks. Growth in the Chinese market should be at a double-digit rate once again despite more moderate economic dynamism than last year. Demand for cars has meanwhile stabilized at a low level in Western Europe, and a gradual improvement of the market situation is to be anticipated in the rest of the year. As the general economic environment is still difficult, this will be too weak to compensate for the significant market losses of the first half of the year. A decrease is therefore expected for the full year. The German car market should follow a similar path in the fourth quarter, but will also be smaller in 2013 than last year. Market contraction is anticipated also in Japan, primarily due to unusually strong demand in the previous year caused by state incentives for car buyers.
Apart from China, growth prospects for car markets in the major emerging economies have become significantly less favorable. From today’s perspective, significant market contraction is to be expected for both Russia and India.
From the current
perspective, the best that can be expected for global demand for medium and heavy-duty trucks
in 2013 is a volume equal to the previous year. If the sharp market downturn in India continues unabated and market growth in China is significantly slower than recently expected, slight contraction of the world market cannot be ruled out. Due to political uncertainty in the United States, no significant upward trend is likely for North America in the remaining months of the year. We therefore continue to anticipate market contraction of up to 5% for the full year compared with 2012. In the European truck market, purchases brought forward in connection with the upcoming introduction of the Euro VI emission regulations should be increasingly apparent in sales of new vehicle in the coming months. As new registrations of Euro V vehicles are possible under certain conditions also in early 2014, the special effect anticipated for the fourth quarter of 2013 is still hard to quantify. From today’s perspective, the market is likely to contract by about 5% in the full year. In Japan, the economic stimulus program that was approved this spring has helped to counteract the weakness of demand that was still apparent at the beginning of the year. We therefore assume that the market’s volume will be of the magnitude of last year. Growth of up to 10% is to be expected for the Brazilian market, despite a less optimistic economic outlook. Demand for trucks in Russia will be lower this year than last, however. In India, a significant double-digit drop in truck sales is anticipated due to the continuation of below-average economic growth.
the overall European van market
to contract by approximately 5% in full-year 2013 due to sluggish demand in the countries of southern Europe. The US market for large vans in 2013 should have a volume equal to that of 2012, following a negative development in the third quarter. In Latin America, the market for large vans should expand again following the significant decline of last year. In China, we anticipate a slight recovery of the market we address there.
the Western European market for buses
to have a volume similar to that of last year. Demand for buses in Latin America should increase again after the significant decline of 2012. This should result from a revival of the Brazilian market following the introduction of Euro V emission regulations in 2012.
On the basis
of the divisions’ planning, Daimler expects its total unit sales
to increase again in the year 2013.
is consistently pursuing the “Mercedes- Benz 2020” offensive. Numerous model changes and new products will ensure that the division reaches a new record level of unit sales in 2013. The new E-Class and in particular the new compact cars will make major contributions to the expected growth in unit sales. The models of the A-Class and B-Class and the new CLA are very popular in the market. In order to satisfy the high demand for the A-Class, Daimler has arranged for this car to be additionally assembled by the Finnish production specialist Valmet Automotive. The new E-Class coupes and convertibles have added sales impetus since June. In the future, Mercedes-Benz anticipates significant growth in the luxury segment, primarily due to the launch of the new S-Class in major markets such as China and the United States. The new S-Class, which was launched in Europe this July, is the most important new model of 2013. It sets new standards with regard to comfortable and safe driving with pioneering innovations packaged under the name of Mercedes-Benz Intelligent Drive. Furthermore, the Mercedes-Benz brand continues to profit from the great market success of its models in the SUV segment. Despite its advancing lifecycle, the smart brand with its unique two-seater aims to achieve unit sales in the magnitude of last year in the highly competitive micro-car segment.
anticipates slightly higher unit sales in full-year 2013 than in the previous year. In line with our expectations, demand in the first half of the year was significantly lower than in the prior-year period due to the continuingly difficult economic situation. In recent months, the situation has improved slightly in some key markets. At the same time, with our completely renewed model range, we have gained market share in many important segments and have thus strengthened our market position. Furthermore, some purchases are being brought forward in Europe due to the upcoming introduction of stricter emission limits in 2014. This will help to increase Daimler Trucks’ unit sales during the rest of the year. In the NAFTA region, we have been able to maintain stable sales figures despite the recent decline in demand from the market, which has led to significant growth in market share in Classes 6-8. This sales trend should continue in the coming months. In Brazil, the market recovery is continuing and should contribute towards significant growth in unit sales in the full year. In Asia, we continue to anticipate disparate developments in the various markets. Due in part to state incentives for truck buyers in Japan, we assume that we will increase our unit sales there. Our business volumes in India continue to grow following the launch of the BharatBenz brand, and we are using our presence in the country also to develop new export markets. In other Asian markets, our unit sales should remain at about the prior-year levels as a result of weak demand and tough price competition.
assumes that it will increase its unit sales in 2013. On the product side, the new Mercedes-Benz Citan and the new Sprinter should contribute to that growth. Local production of the Sprinter Classic in Russia should allow us to further increase our unit sales also in that growth market.
assumes that its unit sales of both chassis and complete buses will increase significantly in 2013. In Latin America, Daimler Buses foresees a significant revival of demand in the full year. For the business with complete buses in Western Europe, we expect to see a significantly positive development of sales in a stable market environment, so that our market share should improve significantly.
Following significant growth in 2012, we assume that the Daimler Group’s revenue
will increase again in 2013. The main source of the revenue growth will be the successful product offensive of Mercedes-Benz Cars. In regional terms, we anticipate above-average growth rates for the emerging markets as a whole and also for North America.
On the basis
of our current market assessments, we expect Group EBIT from the ongoing business
of around €7.5 billion for full-year 2013.
For the individual divisions, we anticipate EBIT from the ongoing business in the following magnitudes:
Mercedes-Benz Cars: around €4.0 billion
Daimler Trucks: around €1.7 billion
Mercedes-Benz Vans: around €0.6 billion
Daimler Buses: around €0.1 billion
Daimler Financial Services: around €1.25 billion
In the fourth quarter, we expect Group EBIT from the ongoing business to be higher than in the prior-year period, based on the expectation of continued strong sales performance of our new models, benefits from the initiated efficiency measures, the assumptions made for the development of our key markets and less favorable currency exchange rates.
On the basis of current market assessments, we expect improvements in earnings from the ongoing business for all the automotive divisions and at the Group in the following years. This assessment is supported by the consistent implementation of our efficiency and growth programs, especially Fit for Leadership at Mercedes-Benz Cars and Daimler Trucks #1. At Daimler Financial Services, we anticipate an ongoing stable earnings development.
the framework of our global growth strategy, we want to make effective use of the opportunities offered by the international automotive markets. This will require substantial investment also this year in local production facilities, new products and new technologies. In particular to support the product offensives at Mercedes-Benz Cars and Mercedes-Benz Vans, we will once again increase the Group’s capital expenditure
(2012: €4.8 billion).
We expect research and development spending
to be in the magnitude of last year (€5.6 billion). Key projects are the successor models to the C-Class and the E-Class and the new smart models. We will also invest substantial funds in new, low-emission and fuel-efficient engines, alternative drive systems and innovative safety technologies.
perspective, we assume that the number of employees
worldwide at year-end will remain stable compared with the end of 2012.
This website 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; an exacerbation of the budgetary situation in the United States; 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; 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 circumstancesat 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