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External threats:.
Daimler faces several threats. The easing of tensions between East and West reduces the need for military hardware. Thus, Daimler's defence unit may fall on hard times in the 1990s. But the focus here will be on the automobile sector. .
In Europe, and indeed around the world, the German BMW firm is Daimler's major competitor. While in the past, BMW's strength was in smaller cars, the Series 5 and 7 cars compete directly with Mercedes's middle- and upper-class luxury cars. The recent agreement of co-operation between the French Renault and Swedish Volvo carmakers reduces their development costs and makes their cars more competitive with Mercedes in the European market. Moreover, Volvo plans a joint project with Mitsubishi for making cars in a plant 70 miles from Amsterdam, Holland. American manufacturers have a strategy of their own. In order to gain access to the Mercedes/ BMW dominated luxury market, Ford acquired the British Jaguar Company. Similarly, General Motors formed a strategic alliance with Swedish Saab-Scania. An even greater threat to Mercedes is the recently introduced Japanese luxury cars Lexus and Infinity by Toyota and Nissan respectively. Comparisons showed the Japanese cars are up-to-par with those by BMW and Mercedes. BMW, the traditional rival, is not only a threat to Mercedes in the European market, but also in Japan where the appetite for European luxury cars has increased. Daimler is engaged in a cooperative agreement with the Japanese Mitsubishi company. The ties between the two companies go beyond their interests in cars; they extend to electronics and aerospace. For example, the aim is to produce jointly a 75-seat aircraft. .
The combination of these two giant companies makes the competition shudder. Another threat to carmakers in general and to Mercedes in particular, are laws and regulations governing emission requirements. Diesel engines, Mercedes's traditional strengths, have come under .