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TheStreet Open House

Mercedes-Benz Consistently Implements Its 2020 Growth Strategy

Stocks in this article: DAI

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.

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