Daimler upbeat on Mercedes sales

September 25, 2002

Stuttgart, Germany -Reuteurs reports that the head of DaimlerChrysler's luxury Mercedes cars business said on Tuesday the division hoped to buck a downward industry trend in unit sales but warned that a war in Iraq would harm trade.

Mercedes-Benz chief Juergen Hubbert said his division hoped to post flat unit sales for the year and contribute strongly to the German-U.S. group's full-year profit.

"Without being too optimistic, if things continue to develop as they are we could match last year's level, which means we would increase market share in all world markets," Hubbert told reporters in the southern city of Stuttgart.

So far this year, weak macro-economic conditions and subdued consumer confidence have led to a 4.3-percent fall in European car sales.

Asked in an interview with Reuters if he had changed the division's profit goal of matching last year's levels, Hubbert said: "There is nothing to change in that statement."

Mercedes, which earned half of the 1.3 billion euro (dollars) adjusted operating profit posted for 2001 by the world's fifth-largest carmaker, had originally predicted that unit sales would slip 5-6 percent this year from 1.2 million vehicles in 2001.

But the world's biggest auto market, the United States, is holding up better than expected, due mainly to incentives programmes which move vehicles out of showrooms but eat into carmakers' profit margins.

War fear

In the interview, Hubbert also said the economic consequences of a U.S.-led war with Iraq would be felt around the world.

"War can in my opinion only have a negative effect on the world economy," Hubbert said. "No one wants that and we hope such a war could be averted."

"We have no (financial) planning that takes account of such a scenario because it isn't known whether such a conflict would be over in days or months."

Hubbert also said DaimlerChrysler was in talks with the Chinese authorities to open a production site there and the company was looking for a partner. He said he did not expect the talks to be concluded this year.

He also there was great demand for the company's tiny smart car in the United States but it could not be sold there without a change in U.S. car safety legislation.

"We just did a market study which showed there were surprisingly large numbers who said they would buy it straight away. But it's clear there are safety standards there, such as bumper tests, which the car cannot meet due to its whole design concept," he said.

The company is due to showcase its new super-luxury Maybach, with a minimum 310,000 euros price tag, at the Paris car show later this week and Hubbert said DaimlerChrysler was on track to make its first deliveries of the car later this year. It plans to sell 1,000 of the cars every year.