Mercedes Benz

OFFICIAL PRESS RELEASE

- Board of Management member Andreas Renschler: “A return on sales of eight percent is within reach for Daimler Trucks across the entire business cycle.”
- The world’s largest truck manufacturer is maintaining its position through a long-term strategic approach
- Significant growth in the triad markets, consistent globalization strategy in the emerging markets
- Daimler Buses, the world's biggest and most profitable bus manufacturer, has an RoS target of six percent throughout the cycle

Stuttgart/Wörth, Germany, Nov 30, 2010 – The positive trend in the commercial vehicle sector, which last year had to cope with an average sales decline of 50 percent, was confirmed in the figures from Daimler Trucks for the third quarter of 2010. Compared to the result posted for the same quarter last year, Daimler Trucks’ sales increased by 44 percent to 94,800 units.


By the end of September 2010, total sales at Daimler Trucks were up by 34 percent to 249,000 units, compared to the total sales of 185,600 units in the same period of last year.

Daimler Trucks also expects the global truck markets to see further recovery by the end of the year. It forecasts market growth of five percent in Europe, ten to 15 percent in the NAFTA region, 50 percent in Brazil, and between 20 and 30 percent in Japan.

Andreas Renschler explained the prospects for Daimler Trucks and Daimler Buses before an audience of analysts and investors today in Wörth: “The forecasts indicate that the worldwide markets for medium-duty and heavy-duty trucks will grow by eight percent to 2.6 million units in the period between 2010 and 2013. At Daimler Trucks it looks like we will succeed in boosting sales by more than 40 percent to over 500,000 units during the same period. Given this outlook, a return on sales of eight percent is within reach for Daimler Trucks across the entire business cycle.”
Renschler attributed this positive business development to the long-term strategy of the Global Excellence program. Business developments in the commercial vehicle sector are characterized by pronounced cycles. Thanks to its long-term strategy and its four initiatives, Daimler Trucks succeeded in maintaining its position as the world’s largest manufacturer of trucks even during the economic crisis.

The aim of the first initiative, Management of Market Cycles, is to orient Daimler Trucks with the cyclical nature of business in the sector and thus ensure long-term profitability. With tools such as flexible production capacities and working-time models as well as a global production network, it was possible to adjust the production of commercial vehicles and engines to the cyclical developments — during the decline and during the current upturn. Renschler added: “The market forecasts make us optimistic and confident. The economy is rebounding, and with it the demand for commercial vehicles. It’s true that this is market-specific and is happening at different speeds from market to market, but the indications overall are positive worldwide. However, the crisis isn’t entirely behind us yet. I expect that it will be 2013 before we return to the level of demand we experienced in the triad markets in 2007 or 2008.”

The second initiative, Operational Excellence, focuses on the systematic optimization of all processes, in particular the cost basis. Daimler Trucks North America (DTNA) and Fuso in Japan are implementing realignment programs that will lead to baseline savings of around €720 million ($900 million) at DTNA and about €760 million (1 billion yen) at Fuso, beginning in 2011. Both of these programs are progressing ahead of schedule. As the world’s largest manufacturer of commercial vehicles, Daimler is also intensifying its efforts to generate further synergy effects and economies of scale by incorporating new products in an intelligent strategy across regions. “A commonality rate of 70 percent appears realistic from today’s perspective,” said Renschler. “That includes not only components such as engines, transmissions, and axles but also our vehicles’ electrical and electronics architecture.”

The third initiative involves the penetration of existing and prospective markets. The focus in established markets is to offer customers the best possible total cost of ownership. In addition to the vehicle lineup, this will increasingly be achieved with a comprehensive range of services, including full-service leasing (CharterWay) and intelligent fleet and cost management for customers (FleetBoard).

With regard to new markets, the focus is on the BRIC and Next 11 countries.

It is estimated that new vehicle registrations of medium- and heavy-duty trucks will increase in Russia, India, and China by more than per annum 10 percent between 2009 and 2020.

Daimler Trucks is well positioned in the BRIC countries. A 50-50 joint venture with Foton Motor has received government approval in China, and Daimler India Commercial Vehicles is building a truck production plant in Chennai, India. The truck prototypes for the Indian market are already being test-driven on the DICV proving grounds and will be launched in India in 2012. In Russia, two joint ventures are being operated with the truck manufacturer and local market leader Kamaz for the production and sale of the Fuso Canter light truck and the Mercedes-Benz Actros. Both of the vehicles are assembled at the Kamaz plant in Chelny. At Mercedes-Benz do Brasil, €460 million has been invested to increase the production capacity of the São Bernardo do Campo plant by 15 percent. In addition, the company is preparing the facility in Juiz de Fora to produce commercial vehicles so that it can start assembling the Mercedes-Benz Actros in 2011.

According to Renschler, Daimler Trucks’ involvement in the emerging markets is part of its long-term globalization strategy. “In a few years time, when we have established two local brands in China and India and created additional production capacity, Daimler Trucks will be able to penetrate the volume segments in these markets and substantially increase sales there,” said Renschler.

Ensuring that future product generations offer innovations and even more value for customers is the strategic goal of the fourth initiative of the Global Excellence program. This is demonstrated by new products such as the Mercedes-Benz Atego BlueTec Hybrid distribution truck for Europe and the Fuso Canter light truck, which already fulfills Japan’s 2015 truck emissions and fuel efficiency standards. An important focus at Daimler Trucks is alternative drive systems, where the division is demonstrating its leadership in the development of hybrid, natural gas, and fuel cell drives.

Daimler Buses, the world's biggest and most profitable bus manufacturer, has an RoS target of six percent throughout the cycle

The Daimler Buses business unit, with the Mercedes-Benz, Setra, and Orion brands, is the world market leader for city, intercity, and touring buses with a GVW of over eight tons. During the first nine months of 2010, Daimler Buses increased its total sales by 21 percent to 28,300 units. In the same period of 2009, total sales amounted to 23,500 units. Hartmut Schick, Head of Daimler Buses, told the group of analysts and investors in Wörth: "We are the world leaders in the global bus segment. We offer our customers first-class products and the best service in the business. And the trust our customers place in us shows that we're doing everything right. Our total sales in 2010 will considerably exceed the figure for 2009 and secure an approximately 15 percent share of the global market for us."

Public transportation will play an increasingly important role in the future as a result of growing mobility and the evolution of megacities. This is reflected in the development of the global bus market. In 2010, the total production figure of 282,000 units will break the previous record of 281,000 units, which was posted in 2008. And according to the forecasts, the global bus market will grow by three percent to 290,000 units by 2013.

In order to profit from these growth opportunities, Daimler Buses is continuing to consistently implement its strategic initiatives. Like Daimler Trucks, Daimler Buses is focusing on four initiatives that are being implemented within the organization: market growth in traditional and new markets, technological leadership, and efficiency in all business units.

As a result, the positive course of business operations will also have an impact on the return on sales in the future. According to Hartmut Schick, Daimler Buses will achieve a return on sales of six percent throughout the cycle.

In addition, Daimler Buses will be moving full speed ahead toward a zero-emission drive technology with products such as the Mercedes-Benz Citaro G BlueTec Hybrid, the Orion VII Hybrid, and the fuel cell drive in the Mercedes-Benz Citaro FuelCELL Hybrid. According to Hartmut Schick, "The bus is demonstrably the safest, most environmentally friendly, most economical, and most flexible means of transportation. Because of climate change, the growth of the global population, and urbanization, the limits of individual mobility are growing increasingly clear. We see tremendous opportunities for buses, and thanks to our global network we are prepared to take advantage of these opportunities in our markets."

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