Outlook

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Status: April 27, 2012 - Interim Report Q1 2012

At the beginning of the second quarter, most leading indicators suggest that the expansion of the world economy will not only continue as the year progresses, but could actually accelerate towards the end of the year. However, in view of the ongoing risks and market uncertainties, the upswing is still very fragile and sensitive to external disturbances. This applies in particular to the further development of the European Monetary Union (EMU), which will continue to be affected in the foreseeable future by the sovereign-debt crisis and budgetary consolidation actions. There are legitimate concerns that economic growth in the EMU could be negative again in the second quarter of 2012. But the decline should be less than in the first quarter and it is certainly possible that the level of the previous quarter will be maintained. But if the crisis does not get any worse, the recession in the European Monetary Union should be rather mild and of limited duration this year, although regional differences will be considerable. While some of the smaller countries on the periphery will pass through a deep recession and larger economies such as Italy and Spain will have negative growth, the economic outlook for Germany has brightened considerably and positive growth of around 1% is now indicated. The upward revision of growth forecasts for the United States is even more pronounced. Leading indicators suggest that the US economy is now on a path of expansion, but it remains relatively moderate by American standards with growth rates of around 2%. Due to the enormous increase in China’s global importance, its economic development is crucial. Although the country’s economic growth has become less dynamic, a rate of 8% is still possible this year. Whereas the other Asian economies should also post solid rates of expansion, economies in Eastern Europe and Latin America will probably expand at significantly lower rates than in 2011, despite an expected revival in the second half of this year. But with overall expansion of 5%, the emerging markets will once again grow significantly faster than the industrialized countries (1.0 to 1.5%) in the year 2012, resulting in total growth of 2.5 to 3% for the world economy.

The increase in global demand for motor vehicles should continue as the year progresses, whereby the strongest growth stimulus will be from the US and Japanese markets. Growth in registrations of new automobiles of approximately 4% is anticipated worldwide. In the United States, growth in demand for light vehicles of approximately 10% is to be expected, due to the improved economic prospects. This should result in total sales of 14 million light vehicles, which is the highest level in the last five years. The Japanese market will actually grow at a double-digit rate, thanks to ongoing catch-up effects and the return of state sales incentives. In Western Europe, however, the still-unresolved sovereign-debt crisis and the related economic weakness mean that another significant decrease in demand for cars is to be expected. This will reduce the total market volume to its lowest level for more than 15 years. The German market will not be able to completely avoid this trend, but demand should increase slightly. The Chinese car market is likely to continue its expansion, although with somewhat less dynamism than in 2011, but the premium segment should continue to grow at a disproportionately high rate. In India, following last year’s pronounced growth slowdown, rather higher rates are anticipated once again. For the Brazilian market, only a slight increase in new registrations is to be expected once again. Demand for cars in Russia is likely to grow only moderately in 2012, following the strong recovery of the two previous years.

With regard to demand for medium and heavy trucks, the North American market is likely to be the most important driver of demand once again, with growth of between 15 and 20%. The best that can be expected for the truck market in the European Union, however, is demand at about the prior-year level due to the ongoing sovereign-debt crisis and the weak economy. The Japanese market will continue to profit from the ongoing reconstruction activities and should achieve growth of 15 to 20%. Due to the introduction of stricter emission standards similar to Euro V, demand in the Brazilian truck market is expected to decline by roughly 10 to 20%. For China, following the negative development of demand in 2011, new registrations of new trucks are expected to stabilize. The Indian market should be at least at the volume of last year, while significantly more moderate growth in demand is expected in Russia compared with the two previous years.

We expect an overall slight decline in the medium and large van segment of the European van market as a result of the debt crisis and its effects on the economy. This is primarily due to the weakness of markets in Southern Europe. The European market for small vans should expand slightly. After the market for large vans in the United States already developed very positively in 2011, we expect significant growth once again in 2012. We also anticipate further market growth in Latin America. Demand for medium and heavy vans is likely to decrease slightly in China.

We anticipate a stable development for buses in Western Europe. In view of the uncertain economic situation, the market is likely to remain at the relatively low level of the year 2011. In Latin America, we assume that demand will decrease in connection with the introduction of new emission norms.

On the basis of the divisions’ planning, Daimler expects its total unit sales in the year 2012 to be higher than the figure of 2.1 million vehicles achieved in the year 2011.

Mercedes-Benz Cars assumes that it will further increase its unit sales this year and will grow faster than the market as a whole. We expect our unit sales in each of the remaining quarters of 2012 to be higher than in the prior-year periods. In 2012, we will profit from the continuation of strong demand for our cars in the C-Class segment. At the end of March, we launched a new model of the SL, our icon in the sports-car sector. We anticipate further growth for our SUVs, primarily due to the full availability of the new M-Class and as of September 2012 also of the new GL. In addition, the new generations of the GLK compact SUV and of the G-Class will be launched in June 2012. The new models in the high-volume compact-car segment will also contribute towards growth in unit sales; the new B-Class was launched in November 2011 with the new A-Class to follow this September. And a completely new automobile concept will come onto the market in September: the CLS Shooting Brake. In regional terms, we see further growth opportunities for 2012 above all in North America, as well as in China, India and Russia. For the smart brand, we expect an ongoing stable level of unit sales.

Daimler Trucks anticipates another rise in unit sales this year. In Europe, we intend to develop better than the market as a whole, thus further extending our market leadership. Our most important model in this respect is the new Actros. Market effects connected with the introduction of stricter emission regulations in Brazil mean that the sales situation there will be difficult, but we expect to maintain our good market position. Because the average age of trucks is still very high in the NAFTA region, we see a high demand for replacement vehicles and thus expect a renewed increase in unit sales in that market. We anticipate growth in unit sales also in Japan – driven by the reconstruction work following the natural disaster.

We are about to take another major step in the development of new sales markets: In India, we will start production of trucks under the BharatBenz brand in the third quarter. The products for the so-called modern domestic segment are more robust and have lower equipment levels than typical trucks in the industrialized countries, but feature better quality and fuel efficiency than the vehicles currently available on the Indian subcontinent. In the world’s biggest truck market, China, Daimler Trucks is pursuing a dual strategy: the sale of high-value Mercedes-Benz trucks for the premium segment in parallel with the sale of trucks in the lower-priced volume market through our cooperation with Foton. The joint venture will begin to produce trucks under the Auman brand in the third quarter. We operate in Russia together with our strategic partner Kamaz. We are developing the growing Russian market through two joint ventures there and are thus further expanding Daimler Trucks’ global presence.

Mercedes-Benz Vans assumes that it will further increase its unit sales in 2012. The launch of the new Citan in the small-van segment will help to revive our unit sales in Europe. Overall, we expect to maintain the 2011 level of unit sales in Europe. Furthermore, Mercedes-Benz Vans expects to sell more vehicles than in the prior year also in the United States. And we should be able to participate in the positive development of the Latin American markets due to the launch there of the current model generation of the Sprinter.

Daimler Buses anticipates lower unit sales in the year 2012, whereby complete buses should account for a larger proportion of total unit sales. We expect weaker demand this year above all in Latin America due to the introduction of the Euro V emission regulations, which led to purchases being brought forward in 2011. We anticipate a slight recovery of our business with complete buses in Europe.

Daimler Financial Services expects to achieve renewed growth in contract volume and new business in 2012. A normalization of credit risks is to be expected – and thus a moderate increase compared with the unusually low level of the year 2011.

Following the significant growth of the year 2011, we assume that the Daimler Group’s revenue will increase again in the year 2012. In regional terms, we expect to see above-average growth rates in the emerging markets and in North America.

On the basis of current market expectations and the planning of our divisions, we aim for the Daimler Group to achieve EBIT from the ongoing business in 2012 that is in the magnitude of the prior year. This target is based on the assumption of currency exchange rates close to their present levels.

We have set the following targets for the divisions’ EBIT from the ongoing business:

Later this year, Daimler Buses anticipates expenses of up to €50 million from the repositioning of the European bus business and of approximately €60 million from the repositioning of the North American bus business.

Due to strong demand for our products, we assume that our worldwide workforce will expand compared with the end of 2011.

 

Forward-looking statements: 
This internet page contains contains forward-looking statements that reflect our current views about future events. The words “anticipate,” “assume,” “believe,” “estimate,” “expect,” “intend,” “may,” “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 funding 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 as well as to 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 governmental 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 incorrect, then our 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. Any forward-looking statement speaks only as of the date on which it is made.

 

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