In order to secure its success also over the long term, Daimler has made the topic of sustainability into a key element of its growth strategy. “Sustainable growth is only possible on the basis of sustainable action,” stated Dr. Christine Hohmann-Dennhardt, Member of the Daimler Board of Management for Integrity and Legal Affairs, at the presentation of the company’s latest sustainability report. “That’s why growth, sustainability and responsibility constitute the triad of our entrepreneurial activity. And because we take this matter seriously, integrity will be firmly anchored in the individual target agreements for Board of Management remuneration as of this year.”Since 2011, there has been a Group-wide integrity dialogue between executives and workforce across corporate hierarchies and sites. This is intended to secure a sustainably changed awareness among executives and members of the workforce. At the same time, Daimler continues to further develop its compliance program. For example, the company has further refined its analysis for the assessment of risks in business units and its procedure for reviewing business partners. The BPO whistleblower system has been revised and supplemented in Germany with an external contact person in the role of a neutral mediator, Prof. Winfried Hassemer.
In addition, all employees receive continual further training in compliance courses. And since May 2011, Daimler has regularly provided its employees with information on topics related to integrity and compliance in 19 languages in the context of the Group-wide “fairplay” campaign. As another expression of its sustainable action, Daimler was one of the first signatories of the UN Global Compact and it has also been a member of the Global Compact’s LEAD group since January 2011.
Market success due to sustained innovation
The Daimler Group’s strong commitment to sustainability is also clearly visible from its entire product range – from the smart to emotional sedans and sports cars to heavy trucks – with the addition of innovative mobility concepts such as car2go. Last year, Daimler invested €5.6 billion in research and development. One result of that investment was the number of 2,175 new patent applications in 2011 and numerous product innovations that help to secure the Group’s long-term market success.
Prof. Thomas Weber, Member of the Daimler Board of Management for Group Research & Development Mercedes-Benz Cars and Chairman of the Daimler Sustainability Board, explained, “For us as the inventor of the automobile, the priority is on responsible mobility. Examples of that include the smart electric drive and the world’s most economical full-size automobile, the E 300 BlueTEC HYBRID. Both models will be launched in the middle of this year. And our new Actros also sets standards for efficiency: It is the first long-haulage truck to meet the strict Euro VI emission standards already today, although they don’t come into force until 2014.”
Top rating for Daimler’s Sustainability Report
Once again this year, Daimler’s Sustainability Report focuses on the principles of materiality and stakeholder inclusiveness. With its reporting, Daimler fulfills the requirements of the Global Reporting Initiative (GRI). This year’s report has been given an A+ ranking once again. Credits: Daimler AGCopyright © 2012, Mercedes-Benz-Blog. All rights reserved.
Daimler AG sees Mercedes-Benz well on its way to achieving the goals of its 2020 growth strategy and reclaiming the number one position in the premium segment by the end of the decade.Dr. Dieter Zetsche, Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars, stated to investors and analysts at the opening of the new plant in Kecskemét, Hungary: “Mercedes-Benz is consistently implementing its growth strategy. We have a fighting spirit in the entire organization to become the leading manufacturer of premium automobiles once again also in terms of unit sales. We are aware of the challenges and we will master them.”
Following the successful year 2011, in which the division posted new records for unit sales, revenue and earnings, the year 2012 has also started well. Mercedes-Benz Cars is expected to report the best unit sales it has ever achieved in a first quarter.
With its Mercedes-Benz 2020 growth strategy, the Mercedes-Benz Cars division intends to occupy the number one position in the premium segment not only in terms of brand, products and profitability, but also of unit sales. Zetsche left no doubt that all efforts are being made to achieve those four goals, with the support of a large number of activities.
With regards to the Mercedes-Benz brand, Daimler is further strengthening its core brand values of fascination, perfection and responsibility to broaden the customer base and address younger customers. This will be facilitated by the five new models of the new-generation compact car, and also by highly emotive vehicles such as the CLS Shooting Brake.
With products, the automobile portfolio is being rejuvenated and a third product offensive has been started with 10 new derivatives for which no predecessor models exist to be launched by the year 2015. For example, the luxury segment will be enlarged by expanding the S-Class range from three to six models with highly profitable derivatives.
The planned activities also include further reductions in fuel consumption and CO2 emissions. “We are convinced that ‘cool’ and ‘green’ can peacefully coexist in our garages,” said Zetsche. Mercedes-Benz Cars will be able to reduce the average CO2 emissions of its automobiles sold in the European Union from today’s 150 grams per kilometer to 125 g/km by the year 2016. The new A-Class will start with emissions of 99 g/km.
In order to further increase unit sales, the automobile portfolio will be successively expanded and geographical presence will be broadened by expanding sales structures and production capacities, especially in the NAFTA region and in China.
There will be a positive impact on the progress to the top of the premium segment from the fact that the automotive industry continues to be a growth industry. According to forecasts, worldwide car sales will increase from 60 million units in 2011 to 100 million units in 2020. China is already the world’s biggest market in terms of unit sales and will remain so in 2020, but the country’s car market will have doubled by then. China therefore remains a cornerstone of Mercedes-Benz Cars’ growth strategy. The second-most important sales market, the United States, is projected to have an annual average growth rate in the premium segment of 5.6%. And India will advance to become the world’s third-largest car market by 2020.
Irrespective of this development, a clear target has been set of “achieving above-average growth in those markets and of further improving our competitive position,” stated Zetsche. In this context, he affirmed the medium-term target for unit sales of Mercedes-Benz: sales of more than 1.5 million vehicles in 2014 and more than 1.6 million in 2015 (2011: 1,279,100). Zetsche pointed out that the emphasis was on the word “more.”
Mercedes-Benz Cars will further improve its profitability by means of project-related cooperation such as with Renault/Nissan, as well as through savings achieved from the module and platform strategies and improved efficiency in the value chain. At the same time, the enhanced flexibility of the international production network will make it possible to react faster to fluctuations in demand.
Due to savings from the module strategy and further efficiency actions, the division will be able to compensate for the cost burden anticipated in the automotive industry from rising raw-material prices and investments to reduce CO2 emissions, thus safeguarding its profitability targets. “At Mercedes-Benz Cars, we are approaching our targeted return on sales of 10 percent, which we want to achieve on a sustained basis as of 2013 – on the assumption that our business environment will remain stable,” emphasized Zetsche.
How the Mercedes-Benz 2020 growth strategy works in practice can first be seen in the compact-car segment. The new plant in Kecskemét is a state-of-the-art factory for Mercedes-Benz Cars; it will produce cars in conjunction with the plant in Rastatt and will make a key contribution to economy through volume flexibility.
Profitability in the compact-car segment will be additionally improved compared with the predecessor generation by producing a significantly higher volume of five different cars from the same architecture instead of two, and by spreading the production network over three plants (Rastatt, Kecskemét and Beijing).
On the occasion of the opening of the new plant for the production of the new B-Class, Daimler had invited investors and analysts to attend a division day in Kecskemét in Hungary.
Credits: Daimler AG Copyright © 2012, Mercedes-Benz-Blog. All rights reserved.
Daimler Buses achieved its second-best sales result ever in 2011, selling a total of 39,740 vehicles or 2% more than in the previous year. The division achieved this result despite difficult sales conditions for complete buses. The only time that sales were even higher was in 2008, when almost 40,600 units were delivered. As a result, Daimler Buses continues to be the world’s leading supplier of buses weighing more than 8 tons GVW.
311,000 buses were sold worldwide, an increase of 2% compared to the previous year. Whereas business was booming particularly in Latin America, the bus market in Western Europe remained in a slump because of the financial and debt crisis. Market development was similarly negative in North America, which, like its Western European counterparts, suffered from public sector budget constraints and therefore from substantially fewer calls for bids.
Strong sales increase in growth markets
The main reason for the rise in sales at Daimler Buses was the increased demand in Latin America, where the division boosted sales of Mercedes-Benz brand chassis by 8% to 25,000 units. Sales were also buoyed by purchases made earlier than planned due to the introduction of the Euro V emissions standard in Brazil in 2012. The market share of Daimler Buses in Latin America remained at a high level of around 43% in 2011. Substantial increases were posted in Mexico as well. Business was also good in Turkey, where sales rose by 55% to the record figure of 1,100 buses.
By contrast, Daimler Buses was unable to buck the downward trend in Western Europe and North America. As a result, sales dropped in Western Europe by 17% to 5,900 vehicles and chassis. Sales of city buses once again declined steeply, as the public sector continued to be negatively influenced by budget restraints. The division sold 600 buses in North America, or almost one third less than in 2010. Budgetary constraints were also the defining factor in this market.
“In 2011 we kept pace with the global market as a whole,” says Hartmut Schick, Head of Daimler Buses. “We captured an impressive 12% of the global market, which makes us the world’s Number One bus supplier. More specifically, we clearly maintained our leading position in the core markets.”
Daimler Buses’ revenues and earnings both declined in 2011. At €4.4 billion (2010: €4.6 billion), revenues were slightly lower than in the prior year. These figures are the result of two contrary developments. Whereas the demand for chassis rose substantially, it dropped considerably for complete buses, which generate significantly more revenue per bus. This development therefore had an even bigger impact on earnings than on revenues, and EBIT declined from €215 million to €162 million. “2011 was clearly a chassis year, while the business with complete buses was very sluggish, particularly in Europe,” comments Schick.
"We've got the right strategy"
Even though Daimler Buses’ return on sales dropped to 3.7% in 2011 (2010: 4.7%), the division’s target for 2013 remains at 6%. “We have the right strategy, and we will systematically pursue it,” says Schick. A key element of this strategy is the GLOBE 2013 growth and efficiency offensive. This “fitness program” will be rolled out at all locations and along the entire value chain. “We will leave no stone unturned and make sure that nothing is omitted,” states Schick.
One of the aims of this strategy is to more strongly interlink the European production network, which has locations in Germany, Turkey, and the Czech Republic. The two German bus plants in Mannheim and Neu-Ulm will remain an integral part of this network, which is why the division invested extensively there in recent years as well as in Hosdere, Turkey.
“GLOBE 2013 will further increase the competitiveness of the German locations. We are making Mannheim and Neu-Ulm sustainably fit for the future. Daimler Buses is the only major bus manufacturer to remain faithful to Germany as a production location,” says Schick.
As part of GLOBE 2013, Daimler Buses will exploit existing growth potential in its traditional markets and further expand its business operations into new ones. In response to the introduction of the Euro VI emissions standard, the division is launching a product offensive in the city bus segment as well as in the coach market. Daimler Buses’ Travego Edition 1 is the first Euro VI-compliant coach. “Our products precisely meet our customers’ wishes, and we will systematically exploit growth potential,” says Schick.
City buses in India — chassis in China
Big growth opportunities are also offered by new markets such as India and China. After having introduced two travel coach models in India since 2008, Daimler Buses is now launching the first Mercedes-Benz city bus there. India is the world’s second-largest bus market, with a current volume of about 46,000 buses per year. Experts predict that this volume will grow to around 80,000 units in 2020.
By then, the bus market in China is expected to increase from its current level of more than 100,000 units to around 150,000 units. Daimler Buses is taking a multi-track approach in order to exploit the opportunities in China. The division will begin selling chassis in the country this year. In addition, Daimler Buses will talk with the Chinese company Foton about joint projects. Foton and Daimler are already cooperating in the truck sector. The two companies are partners in the joint venture company Beijing Foton Daimler Automotive Co., Ltd., which produces Auman brand medium-duty and heavy-duty trucks in China.
Daimler Buses expects sales to be negatively affected by the introduction of the Euro V emissions standard in Brazil this year, whereas business will probably improve slightly in Western Europe.
Credits: Daimler AG
Copyright © 2012, Mercedes-Benz-Blog. All rights reserved.
