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Mercedes Delivers Bullish Forecast On China Strength

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Mercedes is seeing signifcant sales growth in China. It is Mercedes's third biggest market with sales of 100,000 cars compared to 67,000 in 2009. Daimler CEO Dieter Zetsche says that given no downturn in the world economy Mercedes-Benz cars should reach its target for return on sales of 10% by the second half of 2012. He predicted EBIT of 2.5-3 billion euros for 2010, and plans to boost expenditures for R&D in fuel efficient technology and capital investments in new vehicle models in the second half of 2010. Analyst Warburton at Sanford and Bernstein, writes that Mercedes is likely to pass 7% margins in the first half of 2010, and will get a boost from a weaker euro plus strong sales in China. The only question is, as Dieter Zetsche noted, prospects depend on no downturn in the global economy. China's economy is growing too fast to be sustainable growth and a property bubble is developing, and its not certain how long strong sales in China will last. There are other signs of a slowdown in the global economy. See global economy.

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