The world economy. With growth of approximately 2.5%, the world economy expanded in 2012 at a below-average rate and more slowly than the growth of 3.2% recorded in the prior year. (See graphic 3.04) Overall, 2012 was a difficult year for the world economy, which was significantly affected by structural adjustments caused by the financial crisis in the years 2008 and 2009. One major negative factor was the sovereign-debt crisis in the European Monetary Union (EMU), which not only affected the economy of the euro zone, but also triggered considerable turmoil on the financial markets. At the same time, there were sharp fluctuations in the price of crude oil – primarily driven by geopolitical unrest. And then in the summer months, key economic leading indicators worsened so much that the danger of recession increased considerably. Major central banks reacted to this by taking significantly expansive measures. This applies above all to the Chinese Central Bank, the US Federal Reserve and the European Central Bank (ECB). Although the situation improved somewhat following these actions, investor and consumer uncertainty remained very high in 2012, and the resulting crisis of confidence prevented any stronger economic expansion.
Developments in the industrial countries were disappointing with economic growth of 1.2%, a similarly weak level to that of the prior year, and once again significantly lower than their long-term potential. Although the Japanese economy was still stimulated in the first half of the year from reconstruction efforts after the disaster of 2011, it subsequently lost so much impetus that gross domestic product (GDP) decreased once again in the third quarter. In the United States, both consumption and investment developed weakly. Private consumption was dampened by the continuation of relatively high unemployment. And companies became more unwilling to invest as the year progressed, primarily due to fears of the “fiscal cliff” anticipated for the beginning of 2013. But as the real-estate sector supplied positive impetus once again, the US economy achieved overall growth of just over 2%.
The EMU posted the weakest development in the year under review. Not only did the hard-hit peripheral countries remain in recession, but larger economies such as Italy and Spain slipped into clearly negative growth. The two largest countries, France and Germany, also lost a lot of their growth impetus. While the French economy stagnated, the German economy achieved growth of 0.7% due to a strong first half of the year. But strong economic headwinds also in Germany led to slightly negative growth in the fourth quarter. In total, the EMU therefore posted a GDP decrease for the year of approximately 0.5%. The period of the summer months was particularly alarming, when concern about the disintegration of the euro zone reached its peak. It was only due to the announcements made and measures taken by the ECB in September that the situation did not escalate any further and the financial markets calmed down again somewhat. However, the structural problems of the individual countries were not solved, so the European sovereign-debt crisis was by no means overcome at the end of 2012. The countries of Western Europe outside the EMU did not remain unaffected by the unfavorable environment, and also the British economy was unable to expand over the full year.
Against the backdrop of the global growth weakness, the emerging markets grew at an overall rate of approximately 4.5%, which is significantly more slowly than in the prior year (5.9%). The development in China was particularly worrying. Growth there slowed down continuously and fell below the 8% mark for the year as a whole. In India, economic expansion fell from 7.5% in 2011 to significantly less than 6%. High inflation rates dampened private consumption, and the resulting high central-bank interest rates reduced investment activity. Also in other emerging markets, there was a negative impact from hesitant export demand and turbulence on the financial markets due to the debt crisis in the euro zone. Economic growth in Eastern Europe and Latin America was significantly weaker than in the prior year with rates of approximately 2.5%, after well over 4% in 2011.
In this difficult global economy, exchange rates were once again very volatile. Against the euro, the US dollar fluctuated over the year in a range from $1.20 to $1.35. But at the end of 2012, it was close to the level of early 2011 at $1.32 to the euro. The fluctuation of the Japanese yen to the euro was even higher, within a corridor of ¥95 to ¥114. By the end of 2012, the euro had gained nearly 14% against the yen compared with the beginning of the year. Against the British pound, the euro closed the year with a slight depreciation of 2%, after rather less volatile movements towards the end of the year.
Automotive markets. Despite relatively unfavorable economic conditions, the worldwide demand for automobiles grew by almost 7% in 2012, reaching a new record level. (See graphic 3.05)
The fact that this growth was actually higher than in 2011 is primarily due to special effects in the Japanese and the Thai markets, which slumped significantly following the natural disasters in 2011. In 2012, pent-up demand in combination with state incentives for car buyers led to strong market growth of 30% in Japan and actually more than 80% in Thailand. The US market also made a substantial contribution to the global growth in demand. The recovery of demand in the United States continued during 2012, resulting in market growth of a good 13% over the year as a whole. With a total of 14.4 million vehicles, new registrations were at their highest level since 2007, the last year before the beginning of the global financial crisis. Another important driver of demand was again the Chinese car market, which expanded by about 8% despite the economic slowdown and was thus once more the world’s biggest car market, almost equal to the United States.
On the other hand, demand for cars in Western Europe was still affected by the sovereign-debt crisis and the related economic weakness. With contraction of 8% and sales of well below 12 million vehicles, the market was at its lowest level since 1993, when Western Europe was in a pronounced recession. Compared with the volumes achieved before the financial crisis, approximately three million fewer cars were sold in Western Europe last year, which is roughly equivalent to the number of new cars registered in Germany in 2012.
In the large emerging markets, however, the growth trend continued also outside China. In India, car sales increased by approximately 10%, once again expanding at a considerably higher rate than in the prior year. With growth of more than 10%, the Russian market exceeded the level of 2008, after demand had meanwhile slumped by about a half due to the worldwide financial crisis.
Global demand for medium and heavy-duty trucks decreased significantly in the year under review. This development was primarily due, however, to significant market contraction in China (about -25%) and India (about -15%). But apart from those two markets, which together make up nearly half of the world’s total volume, worldwide registrations increased only moderately and varied significantly from one region to another.
Despite the significant slowdown during the year, the North American market developed positively with growth of almost 13%. The Japanese market posted a strong increase of 30%, profiting especially in the first half of the year from the reconstruction activities after the natural disaster, from pent-up demand for trucks, and also from state incentives for buyers. The latter ended in the third quarter, and the stimulating effect of reconstruction also subsided, so market growth weakened considerably in the second half of the year. The European truck market, which was suffering amongst other things from the ongoing sovereign-debt crisis in the euro zone and the resulting economic weakness, lost almost 10% of its volume. The German market was unable to escape this development and contracted by a similar magnitude.
The Brazilian market posted a drastic drop in demand of approximately 20%. This was the result of a significant economic slowdown as well as purchases brought forward to 2011 and considerable uncertainty in connection with the introduction of stricter emission limits. There was a revival of demand towards the end of the year, however. The Russian market, which had lost about two thirds of its volume due to the global financial crisis, continued its dynamic recovery with significantly double-digit growth once again, thus returning to the pre-crisis level of 2008.
The Western European market for medium-sized and large vans, which continues to be very important to Daimler, contracted by 8% as a result of the sovereign-debt crisis and the related consumer uncertainty. All the major Western European markets were affected, but demand dropped particularly sharply in the markets of Southern Europe. The market for large vans was generally favorable in the United States, however, while the Latin American markets were in aggregate weaker than in the prior year due to the slowdown of economic growth in Brazil. In China, the market of premium vans, which is relevant for us, also contracted last year.
European bus markets continued to contract as a result of the sovereign-debt crisis, with a particular impact on the route buses segment. In Turkey, the bus market profited from a clear revival of demand for city buses. In Latin America, however, the market volume decreased significantly. This was primarily due to the introduction of Euro V emission regulations in Brazil and the resulting unwillingness to buy.