Mercedes 2012 Annual Report Download - page 124

129
3 | Management Report | Risk Report
Production and technology risks. In order to achieve the
targeted levels of prices, factors such as brand image, design
and product quality play an important role, as well as addi-
tional technical features resulting from our innovative research
and development. Convincing solutions, which for example
promote accident-free driving or further improve our vehicles’
fuel consumption and emissions such as with diesel-hybrid
or electric vehicles, are of key importance for safe and sustain-
able mobility. Because these solutions generally require
higher advance expenditure and greater technical complexity,
there is an increasing challenge to realize further technological
advances while simultaneously fulfilling Daimler’s own quality
standards. If we fail to perform this task optimally or if technical
developments at an advanced stage prove not to be market-
able, that could adversely affect the Group’s future profitability.
Product quality has a major influence on a customer’s
decision to buy a car or commercial vehicle. At the same time,
technical complexity continues to grow as a result of addi-
tional features, for example for the fulfillment of various emis-
sion, fuel-economy regulations and safety instructions,
increasing the danger of vehicle malfunctions. Technical prob-
lems could lead to recall and repair campaigns, or could even
necessitate new engineering work. Furthermore, deteriorating
product quality can lead to higher warranty and goodwill costs.
Risks related to the legal and political framework. The
legal and political framework has a considerable impact
on Daimler’s future business success. Regulations concerning
vehicles’ emissions, fuel consumption and safety play
a particularly important role. Complying with these varied and
often diverging regulations all over the world requires stren-
uous efforts on the part of the automotive industry. We expect
that we will have to expend an even larger proportion of our
research and development budget to ensure that we fulfill these
regulations. Many countries have already implemented stricter
regulations to reduce vehicles’ emissions and fuel consumption,
or are now doing so. For example, new legislation in the United
States on greenhouse gases and fuel consumption stipulates
that new car fleets in the United States may only emit an average
of 163 grams of carbon dioxide per kilometer as of 2025
(approximately 100 grams per miles). These new regulations
will require an average annual reduction in CO2 emissions
as of 2017 for cars of 5% and for SUVs and pickups at first of 3.5%
(this rather lower rate applies until 2022). This will hit the
German premium manufacturers and thus also Daimler harder
than for example the US manufacturers. As a result of strong
demand for large, powerful engines in the United States and
Canada, financial penalties cannot be ruled out. Regulations
on the CO2 emissions of new cars also exist in the EU. For 2015,
all new cars in Europe will have to meet a fleet average
of 130 g CO2/km. The relevant limit for Daimler depends on
the portfolio of cars we sell in the European Union and will
depend on vehicle weight. Furthermore, the EU Parliament
and the EU Council of Ministers are currently dealing with
an EU regulation proposed by the EU Commission calling for
fleet averages to be reduced to 95 g CO2/km by the year 2020.
Daimler will have to pay penalties if it exceeds its limits. The
Chinese authorities have defined fleet average fuel consumption
as of 2015 of 6.9 liters per 100 kilometers (approximately
160 g CO2/km) as the industry’s target for new cars. As the
legislative procedure for 2015 has not yet been concluded,
there is a risk that although each car will be calculated for the
average of the fleet, it must individually at least meet the
previous limits, posing a big challenge for cars with powerful
engines. Sanctions have not yet been announced. For the
year 2020, a new, very demanding target of 5.0 l/100 km has
been stipulated (approximately 116 g CO2/km), although
the exact details are still under discussion. Similar legislation
exists or is being prepared in many other countries, e.g. in
Japan, South Korea, India, Canada, Switzerland, Mexico, Brazil
and Australia. Daimler gives these targets due consideration
in its product planning. The increasingly ambitious targets require
significant numbers of plug-in hybrids or cars with other types
of electric drive. The market success of these drive systems will
be primarily determined by regional market conditions, for
example the battery-charging infrastructure and state support.
But as market conditions cannot be predicted with certainty,
a residual risk exists. Very demanding regulations for CO2
emissions are also planned for commercial vehicles, which will
present a challenge for the Mercedes-Benz Vans division,
especially in the long term. Legislation on reducing the green-
house-gas emissions and fuel consumption of heavy com-
mercial vehicles has also been passed or is under discussion.
We therefore have to assume that the statutory limits will
be very difficult to meet in some countries. In addition to emis-
sion, consumption and safety regulations, traffic-policy
restrictions for the reduction of traffic jams and pollution are
becoming increasingly important in the cities and urban
areas of the European Union and other regions of the world.
Drastic measures such as general vehicle-registration restric-
tions like in Beijing, Guangzhou or Shanghai can have a dampen-
ing effect on the development of unit sales, especially in
the growth markets. Daimler therefore continually monitors
the development of statutory and political conditions and
attempts to anticipate foreseeable requirements and long-term
targets already during the phase of product development.
The biggest challenge in the coming years will be to offer an
appropriate range of drive systems and the right product
portfolio in each market, while fulfilling customers’ wishes,
internal financial targets and statutory requirements.
As of 2013, the EU has stipulated the use of a new refrigerant
with reduced climate-damaging potential. In so-called real-
life tests in mid-2012, Daimler ascertained a higher flammability
than previously assumed. Daimler’s safety concerns are seri-
ous and no alternative is available to the prescribed refrigerant
at present. For this reason, Daimler is holding constructive
discussions with the relevant German and European authorities
in order to arrive at possible alternative solutions together
with other manufacturers and suppliers. If no solution is found
in good time, this could result in negative effects on the
production costs of the vehicles involved due to the required
technical modifications and on the development of sales.