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Risks
1. Regulatory and Legal Risks: The automotive industry is subject to stringent and continuously changing laws and regulations, which are aimed at protecting the environment, consumer safety, labor safety and product safety. Violation of regulations may cause damage to Mercedes’ reputation.
2. Financial Risks: Mercedes-Benz is exposed to financial risks which include currency fluctuations, credit risk, interest rate risk, market risk, liquidity risk and the possibility of default by vendors.
3. Competitive Risk: The automotive industry is highly competitive and there is intense competition in the global markets from other leading car makers, including Volkswagen, Toyota, and BMW.
4. Technological Risk: The automotive industry is rapidly evolving as it shifts from traditional internal combustion engines to electric vehicles. Mercedes-Benz has entered this market but is lagging behind its competitors in terms of EV technology. This could affect its bottom line.
5. Environmental Risk: Mercedes-Benz is exposed to risks related to environmental regulations and the effects of climate change. The company is in the process of transitioning to more sustainable production techniques which may require higher levels of investment or result in increased costs associated with pollution control.