April 26, 2019 - Daimler Financial Services started in a challenging economic environment with increases in contract volume and insurance business. While new business declined, Daimler Financial Services benefited from the bundling of mobility services with the BMW Group.
At Daimler Financial Services, new business decreased by 3% to €17.3 billion in the first quarter due to lower vehicle sales at the Group compared with the prior-year period. At the end of March, Daimler Financial Services’ portfolio comprised 5.3 million vehicles, representing a contract volume of €157.4 billion, an increase of 2% compared with the end of 2018. The insurance business also developed positively, with 539,000 insurance contracts concluded worldwide through Daimler Financial Services in the first quarter (Q1 2018: 523,000).
The division’s EBIT amounted to €1,209 million (Q1 2018: €548 million). At 35.7%, return on equity was above the figure of 17.9% in the prior-year period. The main reason for this was the merger of the mobility services of the Daimler Group and the BMW Group, which had a positive effect on earnings of €718 million. Further positive effects resulted from the increased contract volume. Earnings were reduced by rising credit-risk costs in some markets and by higher interest rates.
Daimler AG and the BMW Group have merged their mobility services and established a network of five joint ventures. The transaction was closed on January 31, 2019 and includes the five joint ventures REACH NOW (a platform for on-demand mobility and multimodality), CHARGE NOW (battery charging), FREE NOW (ride hailing), PARK NOW (parking) and SHARE NOW (car sharing). The BMW Group and Daimler AG each hold equal stakes in the individual joint ventures. The mobility offerings of BMW and Daimler have built up a strong customer base since they were established and currently have around 66 million customers.
“By merging our joint mobility services with those of the BMW Group, we have created a very good basis in the growth market of urban mobility. The merger has had a positive effect on earnings. This reflects the strong increase in the value of our mobility services, from which we are now profiting as a pioneer of station-independent car sharing with car2go. We will continue to invest in promising business models in the future. Efficiency and sustainable profitability are essential for this,” stated Bodo Uebber, Member of the Board of Management of Daimler AG responsible for Finance & Controlling and Daimler Financial Services.
By merging our joint mobility services with those of the BMW Group, we have created a very good basis in the growth market of urban mobility.
Daimler Financial Services expects a slight increase in new business and further growth in contract volume in 2019, mainly due to the development of unit sales in the vehicle divisions. The development of new digital possibilities for customer contacts and the utilization of further market potential in fleet management will contribute to this trend.
Expected Returns in 2019
- Return on equity of 17% to 19%.