Daimler Financial Services AG expects to post positive results also in the fourth quarter, after achieving earnings of €101 million in the third quarter 2009. “We’ve achieved the turnaround, and we expect to once again make a contribution to the Group’s earnings even though we had the toughest year in our company’s history,” said Jürgen Walker, Chairman of Daimler Financial Services AG, at a press conference at the company’s headquarters in Berlin.
While many banks tightened their criteria for approving auto loans or withdrew from the business altogether, Daimler Financial Services expanded its market share by maintaining a steady market presence and lending practice in a market that contracted as a whole. As a result, the share of new Daimler-built vehicles financed or leased by the company rose to more than 40 percent. Despite the increased penetration rates, the drop in vehicle sales could not be fully offset. Contract volume declined by seven percent to €58.7 billion between the end of 2008 and the end of the third quarter 2009.
Successful refinancing plays a crucial role even in times of crisis when it comes to strengthening the market position of Daimler Financial Services against its competitors. “We had sufficient liquidity to maintain a strong market presence throughout the whole year and provide our customers with affordable loans,” said Walker. An example he mentioned was the expansion of the deposit banking at Mercedes-Benz Bank in Germany, which has more than doubled in volume since the beginning of the year, to over €12 billion. This money not only funds the financial-services business in the key sales market of Germany but also helps fund the dealer-financing business in the UK and Spain through the branches in these countries.
At the end of September 2009, Daimler Financial Services successfully sold the financial markets around $1 billion in asset-backed securities (ABS) from Mercedes-Benz Financial. This ABS transaction met with a great response from investors and is playing an important role in refinancing the financial-services business in North America.
Daimler Financial Services is confident that it will be able to compensate for part of the credit losses through cost savings. A global efficiency program has reduced costs by around 20 percent since the beginning of 2008. Despite these savings, the company is still making crucial invest¬ments in the future, including the modernization and standardization of IT systems and processes and expansion into growth markets. In October 2009, for example, Daimler Financial Services became the first captive financial-services provider to launch operations in the United Arab Emirates. This has given it access to the Middle East, a growth region of considerable importance. In spite of the economic crisis, Daimler Financial Services also experienced dynamic growth in other expanding markets such as China and Brazil.
In the insurance business, Daimler Financial Services is forming strategic alliances with large insurance companies in order to offer its customers a high level of quality and service. “By performing accident repairs at our own workshops, we are ensuring that our customers get the promised quality and also generating additional earnings for our services business through the use of genuine spare parts, for example,” said Walker. Products that combine vehicle insurance with leasing or financing at an attractive monthly rate are enabling the company to further expand the volume of its insurance business in nearly 40 markets worldwide even in a time of crisis. In addition, the company is promoting the purchase of passenger cars and commercial vehicles featuring advanced safety technologies by offering discounted insurance premiums for such products.
About Daimler Financial Services
Daimler Financial Services is a leading provider in the financial-services industry offering tailor-made leasing and financing solutions to promote the vehicle sales of the Daimler Group’s brands worldwide. With a comprehensive product portfolio including financing, leasing, insurance concepts and fleet-management services, Daimler Financial Services is responsible for a contract volume of €58,7 billion, a decrease of 7 percent compared to year-end of 2009. New business decreased by 17 percent to €18.4 billion in the first three quarters of 2009 compared to the previous year.
Worldwide more than every second new passenger car and every fourth commercial vehicle is financed or leased by Daimler Financial Services. Working in close cooperation with the Daimler vehicle brands, Daimler Financial Services strengthens customer loyalty to the group’s brands and generates new earnings potential for the group. Operating in more than 40 countries, the Berlin-based company has a workforce of more than 6,800 employees worldwide.
Source: Daimler AG