In order to clarify the various estimates of DaimlerChrysler’s earnings situation, the company is providing an overview of current business trends before the official third quarter report, to be released on October 26, 2000.
The market situation in North America will have a significant impact on the company’s results, as already indicated in the half-year report. For the year 2000 as a whole, DaimlerChrysler forecasts operating profit — including non-recurring income and expenditure — on the level of the year 1999. Net income and earnings per share are expected to be significantly higher than last year’s figures. Adjusted for one-time items, operating profit for the year 2000 will be in the range of 7 billion euros ($6.16 billion) (1999 adjusted: 10 billion euros/$8.8 billion).
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Mercedes-Benz Passenger Cars to post record figures for sales, revenues and earnings in 2000
Business trends at Mercedes-Benz Passenger Cars remained very positive in the third quarter. Global sales at the division bucked the market trend, rising 4.5 percent through August, to 676,500 units. In Germany, where the market has shrunk by 12 percent, Mercedes-Benz boosted its market share by 13 percent. In the U.S., the division is set to sell more than 200,000 vehicles this year for the first time. The high figures recorded in 1999 for earnings, sales and revenues will all be surpassed. A few days ago, the 500,000th A- Class rolled off the assembly line in Rastatt. Sales of the new C-Class are rising at an unprecedented rate. Additional production capacity will be created in South Africa and Brazil to meet the high demand. Sales of the M- Class rose 30 percent in the first eight months of the year. Despite being two-thirds of the way through its product-cycle, the E-Class remains the clear leader in the segment. Sales of the S-Class rose 41 percent through August and, with a market share of 50 percent, it is the dominant vehicle in the market’s premium segment.
Smart attains cult status and will top 100,000 unit sales this year
Sales of the smart rose 67 percent to 69,500 units through August. In Germany, the smart is the number one vehicle in its segment. Although the smart is officially sold in only nine European countries, it can already be found on the roads of 57 countries around the world. Studies show that the value of the brand has benefited considerably from the high recognition of the vehicle and increased customer identification with the smart.
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By GlobalDataCommercial Vehicles: New acquisitions strengthen global position
The Commercial Vehicles division is expecting to post results in excess of the high figures recorded in 1999 despite the difficult market situation in North America.
The acquisition of Western Star marks another important step in DaimlerChrysler’s multi-brand strategy for trucks, and also established DaimlerChrysler as a full-range bus supplier in North America. In addition, the acquisition of Detroit Diesel makes DaimlerChrysler the world’s leading manufacturer of heavy-duty and mid-range on highway diesel engines. The planned 50-50 venture with Hyundai Motors will not only give DaimlerChrysler a foothold in Korea, one of the most important markets in Asia, but also will open up a range of promising opportunities in other markets, such as Europe and the U.S.
Chrysler Group defends market share despite significant launches and intense competition
As announced at mid-year, the Chrysler Group responded vigorously to the climate of intense competition in the North American market. Also, during continuing changeover to new models, Chrysler Group increased discounts.
This marketing strategy enabled the Chrysler Group to keep its strong sales position in North America, while reducing prior model inventories.
Combined with higher interest rates, higher fuel prices and the start-up costs for the new models, these discounts and the intense competition in North America mean the Chrysler Group will post an operating loss of roughly 600 million euros ($528 million) for the third quarter of this year. Going forward the launch of the new models will enable the Chrysler Group to achieve a reduction in sales and marketing costs.
For the full year the Chrysler Group will post a profit of over 2 billion euros ($1.76 billion). Volume from 2000 calendar year launches as well as new models planned for the coming years (Jeep® Cherokee and New Dodge Ram launches in 2001 alone) are expected to lead to an improvement in earnings and competitive position.
The Chrysler Group has launched a broad range of immediate measures designed to boost earnings. These include utilizing the full potential of the entire supplier chain and increasing efficiency in all major processes and functions. Every platform and product team and function has launched immediate action plans to enhance revenue, reduce near term costs and establish benchmark objectives.
Activity examples include:
debis strengthens its global position as a financial services company
Represented in 67 countries, including all the world’s major markets, debis Financial Services is the fourth-largest non-bank financial services provider in the world. The company focuses on financing for leasing and sales of DaimlerChrysler products as well as on fleet management.
In North America, the high discounts awarded on new vehicles from the Chrysler Group and the decline in the U.S. truck market have had a negative effect on the residual value of lease vehicles. This will have a negative effect on North American earnings for financial service activities. The company will implement a range of concrete measures designed to counter this trend, including limiting the proportion of new vehicles leased with respect to certain models, and intensified marketing activities to help boost used vehicle sales.
Outlook
The new and innovative vehicles that DaimlerChrysler will launch in the coming months and years will improve the company’s global competitive position. In the medium and long term, implementation of the measures outlined above, and a more extensive exchange of components, will enable DaimlerChrysler to achieve a further substantial improvement in its market position. With stakes in Mitsubishi Motors and Hyundai Motor, DaimlerChrysler has secured a unique position in the worldwide automotive industry.
DaimlerChrysler will publish the final figures for the third quarter on October 26, 2000.
On October 9th, DaimlerChrysler will announce in a press conference its e- business strategy and describe its plan for bundling its e-business activities.
Dollar values are converted from euro values with the exchange rate of 1 euro=USD 0.88 based on the closing exchange rate, September 26, 2000.
