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E.U. Truck Problem, Car CO2 Weakness Could Cost Daimler

Audi CO2 Performance Said To Beat Equivalent Mercedes
“Truck Engine Changeover Like Changing All Cars At Once”

Daimler reported huge profits for 2010, and investors were convinced that 2011 would be even better as pronouncements from the corporate leadership left the impression that everything in the garden was lovely.

The only complaint was that Daimler’s profit forecasting was hopelessly inept, although the surprises from the relentlessly understated profit forecasts gave rise to pleasant rather than scary news as it emerged that the first attempt at a forecast for 2010 underestimated the eventual result by more than €5 billion.

But less than a month after Daimler left shareholders with a warm glow, the company seems to have thrown some sand into the machinery.

Daimler CEO Dieter Zetsche made a breakfast presentation to investment bankers in London early in March and some uncomfortable factors emerged about Mercedes and the Truck division’s prospects.

According to Nomura International auto analyst Alexis Albert the truck division faces huge costs as it seeks to meet new Euro 6 emissions regulations, while the upcoming national CO2 rules in France for cars will underline the progress made by Audi, and Mercedes’ laggard status.

“…. owing to Euro 6, Daimler Trucks in Europe are going to switch from “V” engines to inline engines. As a consequence, we understood that Daimler will need to renew most of the truck lineup,” Albert said.

Another analyst who attended the meeting but who declined to be named quoted Zetsche as saying that this requirement would be as expensive as changing all the car models – A, C, E and S, at the same time.

Costs more
Nomura’s Albert also pointed out a weakness in Mercedes CO2 technology so far, which put it at a severe disadvantage for corporate leasing in countries like France. Albert pointed to the March issue of L’Automobile Magazine, which said the Audi V6 3.0 TDI 204 bhp engine emits 137 g/km, while the Mercedes E250 CDI 204 bhp motor emitted 154 g/km, a 12 per cent difference.

“This might not look big, but in France this means a €200 difference on the purchase price because the Mercedes has a CO2 penalty and a yearly corporate car tax difference of €855. A company owning the Mercedes would pay a yearly tax of €1,540, while a company owning the Audi would pay only €685 per year,” Albert said.

According to Albert, Zetsche also said he had no intention of selling off any Daimler divisions. Zetsche also talked about China, saying profit per car had probably peaked there in 2010.

“China will remain an important region for the company, but the best is probably behind us, and there is little opportunity to positively surprise the market,” Albert quoted Zetsche as saying.


Neil Winton – March 15, 2011

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