Opportunities and risks

Our forecasts for the years 2013 and 2014 are based on the assumptions that political conditions will remain generally stable and the world economy will not slip back into recession. We also anticipate growth in worldwide demand for motor vehicles in 2013 and 2014, although at first only with a moderate rate of expansion. In addition to the assessments that we describe in this Outlook, further opportunities and risks exist that may have a positive or negative impact on our potential unit sales, revenue or earnings. This includes the development of currency exchange rates and raw-material prices, as well as the market success of our products and the intensity of competition in our key markets.

We see significant risks for the year 2013 in the renewed worsening or escalation of the sovereign-debt crisis in the euro zone and the resulting turbulence in financial markets and the banking sector, uncertainty about budget and fiscal policy in the United States, a sharp growth slump in China, high price volatility in commodity markets due to geopolitical unrest in the Middle East, increasing inflationary pressure and nascent protectionism. If one of those risk events should occur, the world economy might enter another recessive phase.

A detailed description of the risks associated with our business activities can be found in the Risk Report.

We have already excluded the risks arising for our business from exchange-rate fluctuations for the year 2013 to a large extent by means of appropriate financial instruments. Specifically for the US dollar, we were hedged by approximately 70% as of mid-February 2013.

Even though risks predominate at the beginning of 2013, there are also chances of a generally more positive development of the world economy. The biggest positive growth stimulus would be from a quick and lasting solution to the European sovereign-debt crisis. The quicker investors and consumers overcome the current crisis of confidence and return to more optimistic expectations of the future, the faster and stronger the revival of domestic demand will be. That would significantly benefit the financial markets and the banking sector. In such a case, credit could be expected to start flowing more freely again. Higher investment and increased consumption would also generate positive employment effects and thus reduce the high unemployment rates of many industrialized countries. This would result in significant acceleration of growth, especially in the industrialized countries. Higher economic growth rates would also make it much easier to maintain the still-necessary budget discipline. The dampening effects on the economy of state consolidation measures would then be considerably weaker than assumed. A quick and lasting agreement in the United States on carrying out the required consolidation measures would supply more impetus for domestic demand. Due to the great importance of the US economy for the global economy, this would have positive spill-over effects on other economies. But the emerging markets might also supply stronger impetus in 2013, especially if the overall economic upward trend in the major markets of China, India, Brazil and Russia were amplified. A stronger revival in China would of course be of prime importance.

Such a scenario would open up the possibility of a significantly more favorable business development at Daimler in the years 2013 and 2014. We see opportunities for additional unit sales and earnings in particular if the weak European automobile market recovers faster than assumed.

In the medium term, additional growth potential will be presented above all by the expansion of our presence in Asia and Eastern Europe. Our local activities there will enable us to utilize those opportunities. Together with our local partners, we are expanding our production capacities in China. In India, we have been producing trucks under the BharatBenz brand in a new plant since the year 2012. In Russia, we are intensifying our partnership with truck manufacturer Kamaz, while in Hungary, a new car plant for the production of our new compact class went into operation in 2012.

Furthermore, the upcoming fundamental changes in automotive technology are on the one hand a risk factor, but on the other hand can present considerable opportunities. If we succeed in our aim of playing a pioneering role for motor vehicles and concepts for sustainable mobility with innovative technologies, this should give us additional growth potential in terms of both unit sales and earnings.

We also see opportunities going beyond our planning in the area of innovative mobility services. A large and fast-growing market is being created in which we are already very well positioned with car2go. We will significantly expand our offering in this field of business and intend to participate to an above-average extent in the growth of this market.

New perspectives are also opening up through pioneering cooperations that we have agreed upon in various areas. We combine our expertise with that of our partners, which allows us to bring new technologies to market maturity more quickly and more cost effectively. It also enables us to produce on a larger scale and therefore less expensively.