GERMANY: Daimler Financial Services upbeat on prospects
Daimler Financial Services AG says it expects to post positive results in the fourth quarter, after achieving earnings of EUR101 million in the third quarter 2009.
"We've achieved the turnaround, and we expect to once again make a contribution to the Group's earnings even though we had the toughest year in our company's history," said Jurgen Walker, Chairman of Daimler Financial Services AG, at a press conference at the company's headquarters in Berlin.
While many banks tightened their criteria for approving auto loans or withdrew from the business altogether, Daimler Financial Services says it expanded its market share by maintaining a steady market presence and lending practice in a market that contracted as a whole.
As a result, the share of new Daimler-built vehicles financed or leased by the company rose to more than 40 percent. Despite the increased penetration rates, the drop in vehicle sales could not be fully offset. Contract volume declined by seven percent to EUR58.7 billion between the end of 2008 and the end of the third quarter 2009.
"We had sufficient liquidity to maintain a strong market presence throughout the whole year and provide our customers with affordable loans," said Walker.
An example he mentioned was the expansion of the deposit banking at Mercedes-Benz Bank in Germany, which has more than doubled in volume since the beginning of the year, to over EUR12 billion. This money not only funds the financial-services business in the key sales market of Germany but also helps fund the dealer-financing business in the UK and Spain through the branches in these countries.
At the end of September 2009, Daimler Financial Services successfully sold the financial markets around $1 billion in asset-backed securities (ABS) from Mercedes-Benz Financial. This ABS transaction met with a positive response from investors and is playing an important role in refinancing the financial-services business in North America, the company says.
Daimler Financial Services is confident that it will be able to compensate for part of the credit losses through cost savings. A global efficiency program has reduced costs by around 20 percent since the beginning of 2008.
In the insurance business, Daimler Financial Services is forming strategic alliances with large insurance companies in order to offer its customers a high level of quality and service.
"By performing accident repairs at our own workshops, we are ensuring that our customers get the promised quality and also generating additional earnings for our services business through the use of genuine spare parts, for example," said Walker.
DFS says that products that combine vehicle insurance with leasing or financing at an attractive monthly rate are enabling the company to further expand the volume of its insurance business in nearly 40 markets worldwide even in a time of crisis. In addition, the company is promoting the purchase of passenger cars and commercial vehicles featuring advanced safety technologies by offering discounted insurance premiums for such products.