Mercedes 1998 Annual Report Download - page 28

OUTLOOK
24
STABILIZING WORLD ECONOMY. For 1999 and the coming years,
we expect that the world economic environment as a whole will
again become stable. While it is possible that economic growth
in North America and Western Europe may initially lose some
of its dynamism, we anticipate that these key markets for
DaimlerChrysler will show steady growth. Despite extensive
public programs, the Japanese economy will probably be slow
to overcome its recession. The Asian emerging markets are
thought to have traversed their economic low point by now,
while in South America — starting from Brazil — further
deterioration in the overall economic situation must be
expected.
In our view, the introduction of the euro will help to stabilize
exchange rates. Overall, we expect the euro to lead to a
strengthening of the position of DaimlerChrysler in internatio-
nal competition.
A SLIGHT WEAKENING IN THE DEMAND FOR AUTOMOBILES.
After the extraordinarily high level of 1998, we expect a slight
weakening in the automobile business in Western Europe and
North America. In subsequent years, moderate growth should
be possible again in these markets. Especially individual niche
markets such as minivans, off-road vehicles, pickups, coupes
and convertibles will show above average growth. In Asia, the
demand for automobiles is thought to have bottomed out by
now, but a fundamental improvement in the market situation
cannot be anticipated until the medium term. In South America,
the prospects for growth continue to be favorable, but in the
current year, because of the economic crisis in Brazil, we
expect further declines in the demand for automobiles.
DAIMLERCHRYSLER ON THE GROWTH TRACK. Because of the
high level of orders and the positive business trend in the first
months, we expect DaimlerChrysler revenues to climb to € 137
billion in the current year. A large number of new and appealing
products will enable us to do better than the competition in
many of our business units. Strict cost management in all fields
of business and the synergies which we are achieving through
the integration of Daimler-Benz and Chrysler are favorable
conditions for growing profitably and increasing the company’s
earning power further in the coming years. Significant changes
in exchange rates, especially between the euro and the U.S.
dollar may, however, have an impact on revenues and profits.
O U T L O O K
DaimlerChrysler expects to increase both sales and profitability in the years to come. It is expected that all areas of business will
contribute to the additional growth. By finding synergies from the merger of the two companies and continuing to make extensive
funding available for investments and research and development, we are creating the conditions for profitable growth. By the year 2001,
we intend to increase our business volume by more than € 20 billion over the 1998 figure to € 153 billion.
This also applies if the general economic conditions should
exhibit significantly more negative trends in important markets
than we have assumed in our planning.
FURTHER GROWTH IN THE AUTOMOTIVE BUSINESS. The
Mercedes-Benz and smart Passenger Car Division expects to
maintain steady growth in sales by the year 2001. Because of
the appeal of its products, the division should achieve
significant growth even if market volumes stagnated or
declined slightly.
The Chrysler, Plymouth, Jeep and Dodge brands should be able
to maintain their high sales levels in 1999, even if the overall
trend in North America were somewhat weaker. The
innovations for the 1998 and 1999 model year, such as the
Chrysler 300M sedan, the new Jeep Grand Cherokee and the
compact Neon, will be important contributors. Numerous addi-
tional new products should enable further increases in sales
and revenues in the years to follow.
In the coming years, the Commercial Vehicle Division will focus
on its product drive and on internationalization. The main area
of growth will be in our North American business, which we are
carefully expanding with the new Sterling brand and the
integration of the Thomas Built Buses Corporation. As a system
supplier of major aggregates and components for commercial
vehicles, the powertrain unit will contribute to the growth of
the division.
POSITIVE PROSPECTS IN THE OTHER DIVISIONS AS WELL.
DaimlerChrysler Services plans to utilize the favorable general
conditions in the international service markets to continue its
dynamic growth. In the current year the division anticipates an
increase in sales to around € 11 billion. It should be noted in
this connection that the former Chrysler Financial Services will
contribute approximately € 3 billion while revenues from
debitel (1998: € 1.5 billion) are not included in the projected
turnover as a result of its listing on the stock exchange.
In the Aerospace Division, we have improved our earning
power considerably in recent years. Extensive order volumes,
especially for commercial aircraft and participation in important
international programs in defense and space technology
are establishing a solid foundation for further growth.