Daimler is expected to raise its profit forecasts for the Mercedes Car Group.

According to a report in the Germany financial newspaper, Handelsblatt, Daimler financial director Bodo Uebber told an investor conference that Mercedes would issue new profit targets for Mercedes by the end of this year.

Mercedes Car Group, which includes Smart and Maybach, is currently forecast to achieve a profit margin of at least 7% in the current financial year, and indeed it achieved 7.2% in the first quarter of 2007.

However, according to the article, Daimler CEO Dieter Zetsche is internally demanding a higher figure. In unpublished internal medium term planning documents, the company has set a target for a 9.4% return on sales by 2009.

Daimler is assuming that it can make a much better job of sharing components between models than it could when it still owned Chrysler. The first tangible results of this should be seen with the next generation Mercedes E-Class.

The Handelsblatt article suggests that Daimler is competing with BMW to achieve the highest margin - BMW is expected to achieve a 6.8% profit margin this year.

But Mercedes has a much better position in the upper luxury segments with the S- and E-Class and this should help it achieve a better return, according to an analyst from a German investment bank.