problems
Despite market difficulties Daimler Financial Services (DFS),
which includes Mercedes Benz CharterWay, the leasing arm of
Mercedes’ commercial vehicles unit, reported modest growth in new
business of six per cent in the second quarter of 2008.
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DFS, which provides financing, leasing, insurance and fleet
management services for Daimler’s commercial vehicles, recorded a
new business volume of €7.8bn, up from €7.3bn in Q2 2007. Its total
contract volume also increased by four per cent to €60.4bn over the
same period.
DFS operates in North America, Latin America, Europe, Africa and
Asia. In its European, African and Asia/Pacific divisions, contract
volume was €36.4bn for Q2 2008, up nine per cent on Q2 2007. The
most dynamic growth was seen in the Czech Republic, UK and
Japan.
DFS also expects a further increase in worldwide contract volume
for the fullyear 2008, and anticipates a return on equity of 14 per
cent this year.
Furthermore, given the fact that it has consolidated 15
subsidiary companies in Asia and Eastern Europe in recent months,
and exchange rate effects, the increase in contract volume was
actually 8 per cent for Q2 2008.
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By GlobalDataDFS’ new business growth comes as a surprise given Daimler
Group’s net profit loss of 25 per cent for the same period, and the
difficulties in the general economic climate which undermined
development in the world-wide motor vehicle markets and increased
the price of raw materials.
Furthermore, Chrysler Financial, the US leasing and financing
arm of car manufacturing giant, is due at time of going to press to
shut down its auto-leasing business from August 1. This comes in
response to the plummeting resale values of gas-thirsty trucks and
sport utility vehicles – which have proved to have caused big
losses for US automakers.
However, DFS’ earnings before interest and taxes (EIT) was €183m
for Q2 2008, down 17 per cent on Q2 2007, which reported €220m.This
was the result of the higher cost of risk associated with current
economic difficulties compared to the lower levels the year before,
and higher expenses related to setting up new financial services
organizations in the NAFTA region following the separation from
Chrysler. Nevertheless this was offset by a positive impact on
earnings given the increased contract volume and new business.
The German arm of DFS, Mercedes-Benz Bank, which provides
financing solutions for Mercedes-Benz, Smart, Chrysler, Jeep,
Dodge, Mitsubishi Fuso and Setra, increased its contract volume
from €16.1bn to €16.5bn for Q2 2008 and customers’ funds increased
from €3.8bn to €5.1bn.
It also launched a mobility package, ‘Private Leasing plus’ in
April 2008, which includes a leasing contract with the option to
buy, auto insurance and service cards – demonstrating a trend
towards leasing for private customers. In May 2008, the company
also opened a branch in Spain.
Katherine Gregory
