Mercedes 2006 Annual Report Download - page 93

At the Chrysler Group, the product offensive will be supported by
far-reaching measures designed to improve efficiency, productivity
and quality. The “Recovery and Transformation Plan” presented
in February 2007 combines and intensifies these measures within
the framework of an overall concept for sustained profitability
improvements (see pages 66 and 89). The program comprises a
combination of measures designed to increase revenues and
reduce costs. In the long term, the redesigned business model will
focus on achieving enhanced global presence and a shift in
the product mix towards smaller and more fuel-efficient vehicles.
Better use is to be made of alliances and partnerships around
the world in order to utilize cost advantages and additional growth
potential. The implementation of the “Recovery and Trans-
formation Plan” will give rise to
restructuring charges totaling up to
€1 billion in 2007. In the
year 2007, the Chrysler Group’s loss
from operating activities should be less than in 2006. After breaking
even in 2008, the Chrysler Group strives to achieve a return
on sales of 2.5% in 2009. In order to optimize and accelerate the
presented “Recovery and Transformation Plan” we are looking
into further strategic options with partners beyond the existing
business cooperation partners. In this regard, we do not exclude
any option in order to find the best solution for both the Chrysler
Group and DaimlerChrysler.
As a result of the expected decrease in unit sales due to the
state of the market, the Truck Group’s operating profit in 2007
is unlikely to equal the high level of the prior year. But despite
this temporary drop in earnings, the return on net assets should
continue to exceed the cost of capital, with significant support
from the Global Excellence efficiency-improving program that is
being implemented worldwide. As of the year 2008, the Truck
Group intends to achieve a return on sales averaging more than
7% over its entire business cycle.
The Financial Services division continues to pursue its goal
of supporting the Group’s automotive sales by providing tailored
financial services, while achieving a return on equity of at least
14%. Additional efficiency-improving potential is to be utilized
through various programs adapted to regional market requirements
– such as Roadmap Europe for example.
The profitability of the Vans unit should continue improving
during the planning period. We anticipate further productivity
improvements at DaimlerChrysler Buses, and therefore expect
the unit’s earnings to be at a level similar to its best competitors.
Based on the divisions’ projections, DaimlerChrysler should
achieve a significant increase in profitability in the planning
period of 2007 through 2009.
In the medium term, we aim to achieve a return on net assets
of at least 10%.
A fundamental condition for the targeted increase in earnings
is a generally stable economic and political situation, as well as
the moderate rise in the worldwide demand for passenger cars
and commercial vehicles expected for the years 2007 through
2009. Opportunities and risks may arise from the development
of currency exchange rates and raw-material prices.
In the year 2007, DaimlerChrysler will change over its accounting
and financial reporting to the International Financial Reporting
Standards (IFRS) (see page 211 f). Our present main performance
measure, operating profit according to US GAAP, will then
be replaced with EBIT (earnings before interest and taxes).
The earnings outlook will be put into more detail with the
publication of the interim report on the first quarter of 2007.
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