German automaker Daimler on Friday cautioned of dangers for the economy and its own business because of the outbreak of coronavirus that is spreading in China and elsewhere in the world.
“Risks for the Daimler Group may not only affect the development of unit sales, but may also lead to major adverse effects on production, the procurement market and the supply chain,” the automaker said in its annual report.
It also noted that the virus posed a risk for economic development in China, other Asian countries and elsewhere.
Report said that unit sales at Mercedes-Benz in this year are expected to be slightly below the 2019 level and that this shows the complete change in the business model at smart to focus on electric vehicle models only and a preliminary estimate of potential impact from the coronavirus outbreak both on the supply chain and the automotive markets.
Daimler CEO Ola Kaellenius announced previous week that its major Mercedes-Benz brand had resumed production of luxury passenger cars in Beijing, adding it was still too early to measure the impact of the coronavirus on automaker’s business.
Daimler said that stricter anti-pollution tests have made it more difficult to adhere to new rules and boosted provisions for regulatory proceedings, liability and litigation risks to 4.9 billion euros, increasing from 2.1 billion euros in 2018.
The increase is associated with ongoing governmental and legal proceedings and measures taken concerning Mercedes-Benz diesel vehicles in several regions and markets, along with an updated risk assessment for an extended recall of Takata airbags, the automaker said.
Because of the replacement of the NEDC (New European Driving Cycle) with the new measuring method WLTP (Worldwide Harmonized Light Vehicles Test Procedure), the average emissions of carbon dioxide have increased, the automaker stated.
“In the light of today’s knowledge, this makes it more difficult to achieve the CO2 targets as of 2020,” Daimler added.
The current public focus on vehicle emissions together with possible certifications stops and recalls could result in damage to automaker’s reputation, the company stated.