Mercedes 2006 Annual Report Download - page 90

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Outlook
The statements made in the Outlook section are based on the
operative planning of the DaimlerChrysler Group for the years
2007 through 2009. This planning is based on premises regarding
the economic situation derived from assessments made by
renowned economic institutes, and on the targets set by our
divisions. The forecasts for future business developments reflect
the opportunities and risks offered by the anticipated market
conditions and the competitive situation during the planning period.
The world economy
The world economy is unlikely to continue its above-average
growth rate of 2006 in the year 2007. The anticipated slowdown
will be primarily triggered by weaker growth in the United States,
where domestic demand will be dampened by higher interest
rates and falling real-estate prices. After three years of strong
growth, the US economy is expected to expand at a rate of
distinctly below 3%, which is significantly lower than its long-term
average. The economies of Western Europe and Japan will also fail
to match the solid growth rates that they have recently regained.
In Western Europe, the recent positive revival of domestic
demand will probably weaken slightly in 2007, since the two major
economies of Germany and Italy will expand more slowly due
to their current fiscal policies. This applies in particular to the
German economy, which is expected to grow more slowly
than in 2006 (2.7%) due to the increase in value-added tax. As a
result of the global growth slowdown, the emerging markets
will also lose a little of their dynamism, but will still record growth
rates more than twice as high as in the industrialized countries.
The economic region of Northeast Asia will grow the fastest, still
dominated by China, but the Indian subcontinent and Eastern
Europe should also show strong growth rates.
The world economy is expected to grow by just over 3%, which
is a somewhat lower rate than in 2006, but still a solid rate of
expansion. The greatest risks are to be seen in repeated increases
in oil and raw-material prices, a bigger-than-expected weakening
of economic growth in the United States, a reduction in the United
States’ high current-account deficit and the consequential
depreciation of the US dollar.
Our planning is based on the assumption that compared with
average exchange rates during 2006, the euro will appreciate
against the US dollar and the British pound, but will depreciate
slightly against the Japanese yen.
Automotive markets
Global demand for automobiles will continue to grow in 2007,
but generally at a slower pace than in the prior year. In line with
the generally weaker development of the world economy, we
expect the US market for passenger cars and commercial vehicles
to slightly decrease from 17.1 to 17.0 million vehicles. For the
car market of Western Europe, the best that can be hoped for is
sales of around 14.6 million units, similar to the level of the
year 2006. The Japanese market for passenger cars should grow
slightly, however. Once again, the major emerging markets
are likely to drive global demand for automobiles, with substantial
growth expected in 2007.