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With the unexpectedly smooth increase in the fiscal debt ceil-
ing in the United States, a key individual risk was already
averted early in 2014. But the latest weakening of some lead-
ing indicators has shown that the revival of the US economy
is still susceptible to disruptions. One crucial factor will be how
the planned exit from the expansive monetary policy is man-
aged and whether – as hoped – investors and consumers boost
the rate of growth. If this revival does not occur, the economic
upturn would be much less pronounced. As the Daimler Group
generates a considerable volume of its unit sales in the United
States, especially in the Mercedes-Benz Cars and Daimler
Trucks divisions, and such a lack of dynamic growth could also
spread to other regions, such a development would have
significant consequences. However, if investment activity in the
United States is more dynamic than previously assumed,
this could result in substantially stronger growth. The conse-
quential positive effects on employment and income would boost
demand for the automotive divisions.
If there is no continuation of the required consolidation of
state budgets and reform efforts in the countries of the Euro-
pean Monetary Union, this could cause renewed turmoil
in the financial markets, increasing refinancing costs through
rising capital-market interest rates, and thus jeopardizing
the already fragile economic recovery. The European market
continues to be very important for Daimler across all divi-
sions; for the Mercedes-Benz Cars, Mercedes-Benz Vans and
Daimler Buses divisions, it is still the biggest sales market
in fact. An opportunity that is difficult to assess is to be seen
in a significantly improved economic development in the euro
zone. If the reform measures already initiated take effect faster
and more effectively than so far assumed, economic growth
could accelerate, which would benefit the development of invest-
ment and demand for motor vehicles in the important Euro-
pean market.
A significant growth slowdown in Japan, triggered by the failure
of the country’s expansive monetary and fiscal policy and the
lack of structural reforms, is to be regarded as more of a region-
ally limited risk. A regionally limited opportunity exists in the
possibility of a distinct acceleration of economic growth in Japan.
This could be caused by a significant increase in investment
activity, resulting from the targeted structural reforms and
the expansive monetary and fiscal policies that have already
been initiated.
Due to the significant growth of its importance in recent years,
an economic slump in China would represent a considerable
risk for the world economy. Such a crisis could be triggered by
difficulties with the planned economic restructuring away
from high investment and credit and towards more consumption.
But uncertainties surrounding the Chinese finance sector,
the indebtedness of some provinces and a renewed overheating
of the real-estate market are conceivable causes. On the other
hand, we see a further opportunity in an even stronger develop-
ment of the Chinese economy. This could be triggered
by the reform measures taking rapid effect, accompanied
by increased consumption.
Another risk is to be seen in a renewed weakening of growth
in major emerging markets. There were disappointing develop-
ments already during 2013, especially in countries such as
India, Russia and Brazil, but other economies such as Indonesia
and Turkey also developed below their possibilities. Another
factor in 2014 is that political elections are taking place in major
emerging countries (India, South Africa, Turkey, Indonesia
and Brazil), which tends to increase the uncertainty about ongoing
developments, putting those currencies under additional
pressure and not least reducing investment activity. As Daimler
is already very active in these countries or their markets play
a strategic role, such a scenario represents a risk. An opportunity
is to be seen in the implementation of reforms occurring in
some important emerging economies. If structural reforms are
consistently carried out in countries such as India, Russia
and Brazil, flows of global capital into these countries would
increase again, resulting in new scope for growth.
An exit from the current expansive monetary policy with
too little preparation or carried out too quickly is to be seen
as an additional risk. Announcements by the US Federal
Reserve that bond buybacks would be reduced triggered unrest
in the financial markets already in 2013. Long-term interest
rates increased and there were capital outflows and currency
depreciation in the emerging markets. In some countries,
this also resulted in additional inflationary pressure, which, in
combination with a more restrictive interest policy, reduced
the potential for growth. If a decrease in global liquidity in 2014
leads to more substantial effects, this could significantly
reduce GDP growth through the chain of cause and effect
described above, especially in the emerging economies.
Increased volatility in the financial markets would also dampen
investor and consumer confidence, with an impact on the
global economy.
Industry and business risks and opportunities
Risk category Probability of occurrence Impact Opportunity category Impact
General market risks Medium High General market opportunities High
Risks relating to leasing
and sales financing Low Low
Opportunities relating to leasing
and sales financing Low
Procurement market risks Medium Medium Procurement market opportunities Low
Risks relating to the legal
and political framework Low High
Opportunities relating to the legal
and political framework Low
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