Daimler Sees Financing Uptick in China, but Declines in the Americas

Daimler Financial Services reported a decrease in leasing and loan contracts in the Americas, but saw a “significant” increase in China — in addition to growth in its mobility services sector, according to the company’s third-quarter earnings released today.

“Daimler Financial Services anticipates significant growth in new business and further contract volume based on the strong sales development of the automotive divisions, especially Mercedes-Benz cars,” Bodo Uebber, head of finance and controlling at Daimler Financia, said on the call. “Besides the financial services, we continue to see strong business in the innovative mobility services.”

In the Americas region, leasing and financing contracts revenue declined 9% year-over-year to a total value of $6 billion. “The development of the U.S. car market and concern about residual values in the U.S. and Europe have boosted uncertainty in the capital market about the ongoing business development,” according to the OEM’s earnings report.

Meanwhile, China saw 79,700 new leasing and financing contracts for the third quarter, increasing year-over-year revenue by 45% to $2.8 billion.

“We have a 40% to 50% penetration rate [in China],” Uebber said. “Leasing is not yet as big, but it’s already double digits and there we could, of course, imagine doing more as the market in China gets more mature.”

Meanwhile, the total number of mobility services users increased 116% year over year to 15.9 million customers worldwide in the third quarter. Daimler’s mobility services include Car2Go, Moovel Group, and myTaxi. The revenue for mobility services is “a couple of hundred million,” Uebber said, adding that he considers this “a good and high number” considering the business is still young and is mostly concentrated in Europe. However, he added that market capture was the still the main priority and that he did not want to speculate on a possible IPO for mobility services.

Daimler is also “constantly” monitoring leasing residual values, in particular for diesel engines, Uebber said. The market for used-diesel vehicles had recently slumped in Germany due to the impending diesel ban, according to a published report. “We have not observed the strong decline of vehicle sales or registration and residual values described by the media,” Uebber said.

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