operating profit
Positive business development at DaimlerChrysler Financial Services. The Financial Services division once again developed positively and further improved its market position in 2006. New business increased by 10% to €53.0 billion, while contract vol- ume of €113.3 billion was 4% lower than in the prior year. Adjusted for exchange-rate effects, contract volume rose by 5%. At the end of 2006, the Financial Services portfolio comprised 6.5 million leased and financed vehicles. Operating profit for the year rose by 17% to €1.7 billion (see page 45).
The Financial Services division developed positively in all regions. Our worldwide activities in the year under review focused on further boosting our efficiency and enhancing customer and dealer satisfaction. We also improved our market position by coop- erating with the vehicle divisions and dealers to develop financial services products that meet our customers’ individual mobility needs. These products incorporate features such as servicing and vehicle insurance as part of the monthly financing installment or leasing rate.
Expanded range of products and improved customer satisfac- tion in North and South America.The Americas region (North and South America) managed a total contract volume of €80.4 billion at the end of 2006 (end of 2005: €85.9 billion). This was once again the highest volume recorded by any Financial Services region, accounting for 71% of the total portfolio. Adjusted for exchange-rate effects, the portfolio in the region expanded by 4%. New business rose by 12% to €35.7 billion. This was due in part to the high level of acceptance of our financial services prod- ucts and our expansion into new market segments.
Both Mercedes-Benz Financial and Chrysler Financial once again significantly improved their ratings in the annual dealer satisfac- tion survey conducted in the United States by J.D. Power. In addi- tion, DaimlerChrysler Financial Services Americas introduced new products in 2006 that generated a very positive market re- sponse. With “Business Vehicle Finance”, we expanded the range of financing for commercial vehicles and passenger cars in busi- ness fleets. We also launched the CompleteLease full-service leasing product for Dodge and Sterling commercial vehicles in the United States.
Continual improvement of loan-approval and contract-processing procedures has played a major role in accelerating and simplify- ing the financing and leasing process. In line with this approach, we introduced “eContracting” in the United States in 2006 – the first electronic system for the completely paperless process- ing of leasing and financing applications.
Positive development in the Europe, Africa & Asia/Pacific region.The Europe, Africa & Asia/Pacific region also developed positively in 2006. Contract volume of €32.9 billion was 3% higher than the prior year’s level. The strongest portfolio increases in Asia were recorded in China, Japan and South Korea.
% change +17 +11 +10 -4 -36 -4 06/05 Amounts in millions of € 2005 2006
Within the framework of our strategy for Europe, we intensified cooperation in the 20 European markets in which we operate. In 2006, we worked on further aligning the processes and systems for loan approval, risk management and refinancing. We also devel- oped a more standardized range of products and a more uniform customer-relations policy. We expanded our product range through- out Europe for leasing, financing, insurance and fleet manage- ment. At the end of 2006, we managed a portfolio of €11.2 billion in Western Europe excluding Germany (2005: €10.9 billion).
In Germany, DaimlerChrysler Bank further improved its market position. Contract volume at our biggest European company rose by 5% to €16.0 billion. DaimlerChrysler Bank welcomed its one- millionth customer in May 2006. Since entering the direct banking market four years ago, the bank more than doubled its number of customers. In the year under review, DaimlerChrysler Bank laid the groundwork to utilize the Basel II internal ratings-based approach in its leasing and financing business in 2007. This ad- vanced credit-risk assessment method will further strengthen our competitive position.
By establishing the new Fuso Financial business unit in October 2005, DaimlerChrysler Financial Services expanded its financing activities for commercial vehicles in Japan. In September 2006, Fuso Financial completed the rollout of its financial products for Mitsubishi Fuso’s entire dealership network in Japan. The focus is now on providing financial services to customers throughout the country. With this goal in mind, Mitsubishi Fuso and Fuso Financial are jointly developing attractive products tailored to cus- tomers’ needs.
Since the establishment of DaimlerChrysler Automotive Finance (China) Ltd. one year ago, we have succeeded in expanding our business operations with customers from three to a total of 15 major metropolitan areas in China. Our activities focus on pro- viding support to the dealership network throughout the country. In this way, Financial Services is making an important contri- bution to DaimlerChrysler’s penetration of the Chinese market. Contract volume in China totaled €105 million at the end of 2006.
Successful development of insurance services. The establishment of our center of competence “Automotive Insur- ance” enabled us to conclude important master agreements with insurance companies around the globe during the year under review. These agreements have already led to the significant expansion of business volumes in key markets such as France and Mexico and have also helped our smaller subsidiaries to gain access to favorable conditions and to improve their market posi- tion. Examples here include Sweden, Switzerland and Hungary. Our aim is to offer all of our leasing and financing customers around the world a competitive payment protection insurance policy.
Fleet management solutions gain importance for commercial customers. The Fleet Management unit increased the number of vehicles in its total fleet by 10% to 462,100 units in 2006. We began intensifying the links between passenger-car and commer- cial-vehicle fleet management in the areas of contract processing and customer care. The focus is on achieving even more inte- gration with the sales activities of all the Group’s automotive brands. We now offer fleet management services to our customers in 13 countries around the world.
Toll Collect system running smoothly.The toll collection system in Germany for trucks over 12 metric tons gross vehicle weight continued to operate reliably and smoothly after the conversion from on-board unit 1 (OBU 1) to OBU 2 was completed as planned at the beginning of 2006. The Toll Collect system registered a total of 25.8 billion kilometers traveled in Germany in 2006, with 546,000 on-board units in use at the end of the year. Daimler- Chrysler Financial Services owns a 45% share in the Toll Collect consortium.
DaimlerChrysler Financial Services
provides the right financial services for each vehicle in the Group - already for more than three million customers worldwide.