Mercedes accelerating back into the fast lane: New model puts in strong performance as sales revive

MERCEDES, the German luxury car manufacturer, expects to show improved results this year.

Helmut Werner, Mercedes' chief executive, said yesterday the optimistic outlook was due to improved market conditions and the particularly good performance of the lower-range C-class model.

He said the company would make more than 585,000 cars this year, a rise of 15 per cent from recession-struck 1993. Mercedes, the biggest division of Germany's leading industrial conglomerate, Daimler-Benz, made a loss of DM1.2bn ( pounds 495m) in 1993.

Mercedes said its car sales soared by 37 per cent to 302,300 in the first half of this year compared with a year earlier. Because the second half of 1993 was much stronger, the percentage increase for the whole of 1994 would be much lower, Mr Werner said.

He was particularly pleased with the strong pick-up of sales in the US, which would return to the record levels of the 1980s. While all Mercedes models were outperforming the market, by far the strongest was the lower-priced C- class, which replaced the ageing 190 model in mid-1993.

Analysts said the car division should see a surge in profits in 1994 due to higher sales and recent cost-cutting. The overall result would be slightly offset by continued losses at the bus and truck divisions.

Analysts forecast net earnings at Daimler of DM500m-DM1bn, most of which will come from Mercedes. AEG and Deutsche Aerospace, the other units, will record losses again this year.

The German motor manufacturers' association said yesterday that car production rose 5 per cent to 2,086,200 in the six months to June from the same period a year earlier.