Mercedes 2008 Annual Report Download - page 53

Management Report |Business and Strategy |49
Economy and the industry
The world economy. As a result of the worsening financial and
real-estate crisis, the world economy cooled off significantly
during 2008. Only the relatively stable positive development at
the beginning of the year and the expansion of the emerging
nations’ economies allowed the global economy to achieve total
growth of approximately 2.4% in 2008 (2007: 4.1%). Following
the insolvency of Lehman Brothers investment bank, the crisis
exacerbated in September. By that time, the financial crisis had
already spread to the real economy in the industrialized countries.
The high degree of consumer and investor uncertainty, sub-
stantial asset losses due to falling share prices, rising raw-materi-
al prices and inflation rates until the middle of the year, and
the existing burdens from the credit crisis caused the major
economies to enter into recession. This also applies to the German
industrial sector, which successfully resisted the crisis for
some time but suffered a significant drop in demand towards the
end of 2008. The main causes of this negative development in
nearly all industrialized countries were only slightly rising or actu-
ally falling investment and weak private consumption. An addi-
tional factor for the export-oriented German economy was the
slump in demand from key sales markets. Overall, the industrial-
ized countries achieved growth of just below 1.0% in 2008 (2007:
2.4%), which is the weakest level since the early nineteen-nineties.
By the summer of 2008 at the latest, global growth was driven
solely by economies outside the three major regions of the United
States, Western Europe and Japan. It is becoming increasingly
apparent, however, that the emerging markets will not be indefi-
nitely immune to the real economic effects of the financial crisis.
Although their growth rates are still relatively high, especially
in Asia, they are well below the levels of their recent boom years.
In total, the emerging markets achieved economic growth of
approximately 6%, compared with 7.8% in 2007. A striking feature
of recent years has been unusually high volatility, not only on
stock markets, but also of raw-material prices and exchange rates.
For example, the price of crude oil climbed from US $90 per
barrel in January to an historical peak of approximately US $145
in July, but subsequently fell as low as US $30-40.
Exchange-rate fluctuations were also extremely strong in 2008.
The euro for example reached a record level against the US dollar
of $1.60 in July 2008. However, it then weakened significantly
to $1.40 at year-end, so that over 2008 as a whole the euro fell by
approximately 5.5% against the US dollar and by a sharp 23%
against the Japanese yen. Against the British pound, however, the
euro appreciated by nearly 30%.
Automotive markets. The weak world economy and the inter-
national financial market crisis had a significant impact on the
automotive industry in 2008. Global unit sales of cars decreased
by approximately 5%, the biggest drop in nearly 30 years.
A sharp drop in demand in the volume markets of North America,
Western Europe and Japan was partially offset by growth in the
emerging markets. Demand for commercial vehicles also declined
in the NAFTA region, Western Europe and Japan. Although de-
mand rose in some of the emerging markets despite weakening
towards the end of the year, worldwide unit sales of commercial
vehicles decreased slightly.
As a result of the economic downturn and the severe financial
crisis, the US market for automobiles and so-called light trucks
slumped during 2008. Whereas 16.1 million vehicles were sold in
the prior year, only 13.2 or nearly three million fewer were sold
in 2008. Sales of sport-utility vehicles and pickup trucks suffered
in particular. The depth and speed of the slump were unusual:
some of the monthly sales in the fourth quarter were at the lowest
levels of the past 25 years.
Gross domestic product, growth rate (in %)
Economic growth
2007
2008
10
8
6
4
2
0
Total NAFTA Western
Europe Japan Asia excl.
Japan Other markets
Source: Global Insight
-1
Unit sales growth rate 2008/2007 (in %)
Global automotive markets
Passenger cars
Commercial vehicles
1 Segment passenger vehicles including light trucks Source: German Association of the
Automotive Industry (VDA)
30
20
10
0
-10
-20
-30
Total Western
Europe Japan China
USA1South
America 1